SOCIAL  WRONGS  AND 
STATE  RESPONSIBILITIES 


SOCIAL  WRONGS  AND 
STATE  RESPONSIBILITIES 


BY 

WILLIAM  JANDUS 


IT  SHOULD  REQUIRE  NO  ARGUMENT 

TO  PROVE  THAT  INDUSTRIAL  EQUITY  IS 

INCOMPATIBLE  WITH  THE  PRIVATE 

OWNERSHIP  OF  ECONOMIC 

FUNDAMENTALS 


CLEVELAND 

HORACE  CARR,  PUBLISHER 
1913 


Copyrighted,  1913 
by  William  Jandus 


To  MY  WIFE 


273349 


CONTENTS 


Preface     i 

Introduction 7 

Value  and  the  Economic  Formula 17 

Money  Basis  and  the  "Quantity  Theory" 33 

Self-liquidation  of  Land  Values,  and  Rents  of  Equali- 
zation vs.  Taxation ••'...  42 

The  Solvency  of  Values  the  Key  to  the  Socialization 

of  Economic  Fundamentals 49 

Private  Capitalism  and  Effortless  Income 57 

Private  Ffnance  a  Monopoly  of  Solvent  Functions  .   .  68 

Our  Commercial  Dominions 74 

Economic  Responsibilities  of  State .  82 

PLATES 

I  The  Marginal  Value  of  Gold. 
II   Pyramid  of  Financial  Instability. 

III  Composite  Curve  of  Wealth. 

IV  The  Curve  of  Compound  Interest. 
V  The  Pyramid  of  Social  Parasitism. 

VI  The  Financial  "Fever  Chart." 

APPENDIX 

The  Marginal  Value  of  Gold 97 

The  Depreciation  of  Gold 103 

Land  Values Ill 

The  Distribution  of  Wealth  under  Private  Finance  .  121 
The  Income  of  Private  Finance  and  the  Outgo  of  the 

Unpropertied  Producer 124 

The  Law  of  Money  Volume  and  the  Law  of  Solvent 

Functions 126 

Index  ,  135 


PREFACE 

THAT  our  current  economic  theories  have  been 
premised  in  a  passing  phase  of  social  evolution, 
and  that  the  doctrines  based  upon  them  reflect 
a  predatory  stage  of  human  development,  comes 
as  a  legitimate  inference,  which,  on  closer 
acquaintance  with  the  true  conditions,  ripens 
into  a  conviction. 

The  parasitic  foundations  of  society  come  to 
us  from  the  rudimentary  past,  where  they 
found  their  justification  in  evolutionary  expedi- 
ency; and  while  this  justification  no  longer 
holds,  the  parasitism  continues  to  endure. 

The  discovery  of  the  law  of  solvent  functions 
and  the  formulation  of  the  economic  equation, 
made  possible  the  brief  analysis  of  the  eco- 
nomic situation  attempted  in  these  pages.  If 
the  writer  has  used  his  data  and  arguments  to 
good  purpose,  they  will  show  among  other  im- 
portant things: 
That  along  the  cleavage  plane  of  average 

property  possession  society  falls  apart  into 

two  hostile  camps  with  interests  diverging. 


ii     Social  Wrongs  and  State  Responsibilities 

That  about  five  per  cent  of  the  people  are  above 
the  line  of  average  "wealth,"  two  per  cent  on 
the  line,  and  ninety-three  per  cent  below  the 
line. 

That  by  virtue  of  causes  economically  avoid- 
able, the  five  per  cent  above  the  line  become 
parasites  upon  the  ninety-three  per  cent  be- 
low the  line. 

That  the  propertied  five  per  cent  become  the 
private  owners  of  economic  fundamentals, 
for  the  use  of  which  they  draw  annuities 
from  the  unpropertied,  who  become  the  mere 
renters  of  them. 

That  upon  the  unpropertied  classes  there  fall 
ultimately,  all  the  costs  for  rents,  taxes,  and 
interest  rates. 

That  the  private  ownership  of  economic  funda- 
mentals constitutes  a  usurpation  of  the  com- 
mon privilege,  and  is  economically  indefen- 
sible. 

That  the  bonded  and  mortgaged  insolvencies, 
and  organized  voracities,  of  "Private  Fi- 
nance," are  avoidable  and  economically  un- 
justifiable. 

To  rightly  understand  the  economic  situation 
it  should  be  noted,  that  the  parasitically  advan- 
taged classes  become  industrially  foot-loose  and 


Preface  iii 

politically  free  to  act,  while  the  disadvantaged 
workers  become  industrially  enslaved  and  po- 
litically dependent.  It  may  be  said  therefore, 
without  any  exaggeration,  that  the  present 
social  structure  has  been  planned  and  built 
from  cellar  to  attic  by  the  propertied  classes, 
and  that  the  toil-bound  and  exploited  routine 
producers  had  no  hand  in  its  upbuilding.  The 
resulting  civilization  is  thus  purely  a  class 
product;  its  republics  and  democracies  mere 
revolts  against  titled  parasitism,  and  the  his- 
tory of  political  reform  only  a  record  of  legal 
curbs  imposed  by  the  smaller  parasites  upon 
the  predatory  encroachments  of  the  larger  and 
more  powerful  ones.  In  these  political  conflicts 
the  interests  of  the  routine  producers  were 
not  considered,  and  the  great  underlying 
wrongs  remained  untouched.  Hence  the  so- 
called  free  institutions  of  our  day  continue  to 
be  based  in  the  State-guaranteed  privilege  of 
the  propertied  classes  to  seize  the  labor-powers 
of  the  unpropertied  without  reciprocal  service 
and  without  economic  warrant. 

The  State  is  the  creature  of  the  propertied 
classes,  and  its  policies  are  a  reflex  of  the  cur- 
rent economics,  wherein  the  interests  of  the 
unpropertied  ninety-three  per  cent  have  been 


iv    Social  Wrongs  and  State  Responsibilities 

not  only  overlooked,  but  compromised.  Out  of 
the  "financed  outgo"  of  the  unpropertied,  there 
is  coined  the  "capitalized  income"  of  the  prop- 
ertied, with  the  legal  sanction  of  the  State, 
backed  by  the  machinery  of  government  to  en- 
force the  economic  confiscation. 

Of  the  twenty  millions  of  average  families  in 
the  United  States,  the  earnings  of  more  than 
five  millions  are  financially  seized  and  absorbed, 
in  order  to  maintain  the  propertied  classes  in 
parasitic  affluence.  The  families  in  the  "First 
Estate"  have  each  the  power  to  appropriate 
and  convert  to  their  personal  use,  indefinitely, 
and  without  an  industrial  equivalent,  the  earn- 
ings and  livings  of  from  ten  average  wage- 
earners  to  ninety  thousand. 

Worse  than  all  is  the  persistence  of  institu- 
tions bottomed  in  the  self-interest  of  those  who 
control  and  operate  them.  Every  man  above 
the  line  of  average  possession  has  a  personal 
interest  in  the  preservation  of  arrangements 
that  give  him  the  lever  of  advantage  over  his 
fellows.  He  thus  becomes  an  accomplice  to  the 
perpetuation  of  a  great  social  injustice,  and 
nothing  but  an  awakened  conscience  and  an 
aroused  sense  of  honor  will  prompt  him  to 
surrender  his  advantage  and  place  it  as  a  moral 


Preface  v 

offering  on  the  altar  of  equal  opportunity  and 
economic  righteousness. 

The  social  question  thus  resolves  itself 
squarely  into  an  issue  between  the  propertied 
and  the  unpropertied  classes;  and  inasmuch  as 
the  State,  in  its  corporate  capacity,  is  the  crea- 
ture of  parasitic  interests,  this  issue  narrows 
down  to  the  State  as  the  real  culprit,  and  the 
routine  producer  as  its  victim. 

Meanwhile,  no  one  is  to  blame  for  our  social 
misery.  Our  current  doctrines  being  based  in 
the  very  wrongs  we  are  trying  to  analyze,  it 
became  necessary  to  convict  them  of  error  be- 
fore a  proper  diagnosis  of  the  economic  situ- 
ation could  be  made.  Neither  host  nor  parasite 
could  be  aware  of  the  true  state  of  things  with- 
out a  scientific  analysis  of  social  conditions,  and 
hence  the  underlying  wrongs  and  their  eco- 
nomic remedies  could  not  be  clearly  defined  and 
apprehended.  Until  so  defined  and  appre- 
hended there  can  be  no  social  reform. 

It  is  easy  to  appeal  to  class  prejudices,  and 
to  stir  up  class  animosities,  when  advocating 
social  reform.  Nothing,  however,  could  be 
more  hurtful  and  criminal  at  this  juncture. 
Some  of  the  most  ardent  champions  of  social 
reform  are  to  be  found  among  the  parasitically 


vi    Social  Wrongs  and  State  Responsibilities 

advantaged,  and  it  is  only  fair  to  presume  that 
the  fair-minded  and  high-minded  of  their  class 
will  not  only  gladly  surrender  their  advantage, 
but  lead  the  van  of  social  reform,  when  they 
once  realize  the  injustice  of  present  arrange- 
ments. Nevertheless,  until  justice  has  been  es- 
tablished, the  issue  must  be  regarded  as  a  class 
struggle  and  it  behooves  the  disadvantaged 
ninety-three  per  cent  to  organize  their  scat- 
tered forces  into  political  solidarity  on  a  plat- 
form of  revised  economic  principles,  and,  with- 
the  weapons  of  franchise,  effect  their  own 
deliverance. 

Cleveland,  Ohio 
February  1, 1913 


SOCIAL  WRONGS  AND 
STATE  RESPONSIBILITIES 


INTRODUCTION 

IF  it  is  presumption  to  assail  present  social 
foundations,  even  where  literary  expediency 
prescribes  no  limit  to  discussion,  it  would  seem 
like  madness  to  attempt  it  in  a  running  com- 
mentary on  current  theories  and  doctrines. 
Economics  is  a  large  subject  and  the  refutation 
of  established  error  a  difficult  undertaking. 
Hence,  if  despite  brevity  of  treatment  and 
abridgment  of  data,  the  writer  succeeds  in 
pointing  out  a  fatal  oversight  in  our  handbooks 
on  political  science,  and  some  of  the  conse- 
quences flowing  from  economic  misinterpreta- 
tion, he  will  have  achieved  more  than  should  be 
reasonably  expected. 

It  is  no  trifling  matter  to  quarrel  with  one's 
civilization  and  to  challenge  the  integrity  of 


8     Social  Wrongs  and  State  Responsibilities 

traditions  and  institutions  of  which  one  is  the 
evolutionary  product  and  expression.  Like  im- 
peachment of  ancestry  and  dispraise  of  country, 
such  a  challenge  has  a  look  of  sacrilege,  if  not  an 
aspect  of  treason.  Besides,  new  view-points  are 
disconcerting,  and  their  advocates  unpopular. 

When,  more  than  a  decade  ago,  the  writer 
took  up  the  critical  examination  of  economic 
theories,  he  was  impressed  by  their  argument. 
Granting  the  normality  of  social  conditions  of 
which  these  theories  were  the  economic  inter- 
pretation, he  saw  no  escape  from  their  conclu- 
sions. But  what  if  these  supposedly  normal 
conditions  were  abnormal  ones,  and  we  had  mis- 
interpreted the  shifting  compromises  and  com- 
pensatory expedients  of  evolutionary  develop- 
ment into  a  science  of  economics?  What  war- 
rant have  we  for  assuming  that  our  theories  are 
premised  in  normal  social  conditions? 

A  grain  of  science  is  worth  a  ton  of  opinion. 
Newton's  formula  disclosed  the  mechanics  of 
the  universe,  and  spectrum  analysis  its  chemical 
components.  Out  of  the  law  of  atomic  equiva- 
lence arose  the  science  of  chemistry,  and  out  of 
Ohm's  law  the  modern  application  of  elec- 
tricity. Darwin's  investigations  revealed  the 
essential  unity  of  animate  nature  and  man's 
place  in  it.  Pasteur's  researches  proved  pa- 
thology to  be  a  department  of  bacteriology ;  and 
so  on  through  the  list  of  classified  knowledge; 


Introduction  9 

everywhere,  the  blind  gropings  of  opinion  give 
way  to  the  lucid  interpretations  of  science. 

Now  all  cosmic  interrelations  and  sequences 
which  it  is  the  province  of  science  to  interpret 
find  their  ultimate  expression  in  mathematical 
formulae.  The  laws  of  science  are  the  laws  of 
these  numerical  interrelations,  and  even  the 
remotest  effects  when  traced  to  fundamental 
causes  will  find  their  premise  and  justification 
in  mathematical  terms.  Mathematics,  as  the 
soul  in  the  body  of  science,  is,  therefore,  the 
only  reliable  criterion  of  truth. 

Economics  has  from  the  time  of  Adam  Smith 
been  heralded  as  a  full-fledged  science,  and  there 
has  been  no  one  to  dispute  its  right  to  so  exalted 
a  title.  And  yet,  how  can  there  be  a  science 
without  a  mathematical  basis  ?  We  have  neither 
a  unit  of  economic  measurement  nor  an  equa- 
tion of  economic  procedure.  How  then  can  we 
have  a  science  of  economics?  Partisan  opinion 
does  not  constitute  a  science.  There  can  be  no 
Republican  or  Democratic  economics  any  more 
than  there  can  be  a  political  chemistry  or  a 
partisan  physics.  The  rules  of  economic  pro- 
cedure cannot  be  determined  by  political  ma- 
jorities nor  compelled  by  the  fiat  of  autocratic 
power.  The  fundamentals  of  economics  have 
not  yet  been  written  into  the  text  of  any  polit- 
ical platform  nor  are  they  embodied  in  the 
organic  laws  of  any  country. 


10  Social  Wrongs  and  State  Responsibilities 

If  in  an  economic  sense  the  industrial  process 
is  a  flow  of  services,  it  must  in  an  ethical  sense 
be  a  flow  of  sacrifices.  If  economics  is  a  balanc- 
ing of  productive  services,  it  must  be  a  balanc- 
ing of  productive  sacrifices  also.  On  its  ethical 
side,  therefore,  normal  economics  should  be 
identified  with  applied  justice  and  our  social 
arrangements  should  make  for  industrial  equity. 
Yet  our  theories  lead  toward  no  equalization  of 
the  rewards  and  sacrifices  of  production,  and  no 
sane  economist  has  ever  grown  eloquent  over 
the  justice  of  present  conditions.  Says  John 
Stuart  Mill:  "The  idea  of  distributive  justice, 
or  any  proportionality  between  success  and 
exertion,  is  in  the  present  state  of  society  so 
manifestly  chimerical  as  to  be  relegated  to  the 
region  of  romance."  And  from  Smith  to  Mill, 
and  from  Comte  to  Herbert  Spencer  every  dis- 
tinguished writer  on  social  science  took  it  for 
granted  that  injustice  is  inherent  in  human 
affairs  and  that  social  equity  is  a  matter,  not  of 
applied  economics,  but  of  discretional  morals 
and  organized  benevolence.  It  did  not  occur  to 
these  writers  as  a  reasonable  alternative,  that 
perhaps  their  economic  interpretation  and  not 
"human  depravity,"  might  be  to  blame  for  the 
injustice. 

Taking  these  and  other  phenomena  into 
account  and  bearing  in  mind  that  our  present 
controls  and  disciplines,  like  those  of  the  past, 


Introduction  11 

find  their  justification  in  evolutionary  expe- 
diency alone,  and  must,  in  the  endless  mutation 
of  things,  be  impermanent  and  transitory,  there 
appear  to  be  good  reasons  for  suspecting  that 
the  substructure  of  economic  doctrine  rests 
upon  a  false  premise  and  that  the  pretentious 
edifice  reared  upon  it  will,  sooner  or  later, 
crumble  on  its  foundations. 

There  is  a  loose  end  in  the  tangled  skein  of 
economic  speculation  which  once  fairly  grasped 
and  followed  to  its  logical  unwinding,  leads 
toward  conclusions  greatly  at  variance  with 
present  interpretations.  That  loose  end  is  the 
"marginal  value  of  gold." 
"^Taking  up  the  money  basis  as  a  subject  of 
inquiry,  and  comparing  the  relative  items  of 
expenditure  on  the  average  workingman's 
budget,  the  writer  made  the  discovery  that  the 
marginal  value  of  gold  is  less  than  one-fifth  of 
one  per  cent  of  the  commercial  values  resting 
upon  it  for  functional  solvency.  In  other  words, 
the  money-scope  of  gold  is  so  small  that  there  is 
but  one  unit  of  solvency  for  every  five  hundred 
units  of  merchandise  seeking  liquidation  in  the 
money-base ! 

Following  up  this  astonishing  clue  he  found 
that  commercial  exigencies  and  economic  auto- 
matism raised  this  marginal  value  cumulatively 
about  one  hundred-fold  so  that  it  might  hold 
such  merchandise  conditionally  solvent  by  arti- 


12  Social  Wrongs  and  State  Responsibilities 

flcial  credit  expedients.  That,  deceived  by  this 
compensatory  inflation  of  the  precious  metals, 
economic  students  not  only  overlooked  the  in- 
adequate money-scope  of  the  metal  basis,  but 
misinterpreted  its  financial  limitations  into  a 
law  of  money.  In  this  way  the  functional  insol- 
vency of  the  world's  values  organized  itself 
automatically  into  a  circulation  of  "money 
debts,"  the  eternal  liquidation  of  which  by  time 
expedients  and  brokerage  devices  came  to  be  re- 
garded as  a  normal  phenomenon.  Instead  of  a 
competent  money-base  of  ample  money-scope  in 
which  all  commercial  values  might  be  held  cost- 
lessly  solvent  and  fluid,  we  had  an  incompetent 
money-base  of  limited  money-scope  incapable  of 
solvent  functions  without  artificial  inflation  and 
costly  expedients  of  time-liquidation. 

Out  of  these  insolvent  conditions  arose  the 
concepts  "Capital,"  "Credit"  and  "Interest"— 
the  creedal  trinity  of  the  economic  gospel. 
"Capital"  became  the  basic  factor  of  economic 
interpretation,  money,  as  a  mere  "title  to  capi- 
tal" and  "denominator  of  value,"  taking  sub- 
ordinate rank.  Notes,  bonds,  mortgages,  and 
other  organized  voracities,  instead  of  being 
looked  upon  as  the  offspring  of  a  defective 
money-base,  were  regarded  as  the  normal  phe- 
nomena of  a  normal  money  system  and  defended 
by  numerous  hypotheses,  none  of  which  will 
bear  critical  examination. 


Introduction  13 

Now,  if  this  "Capitalism,"  with  its  funded 
insolvencies  and  apprehensive  credits,  can  be 
proved  to  be  an  avoidable  and  uneconomic  ex- 
pedient of  liquidation,  then  our  present  inter- 
pretations must  be  abandoned  and  our  treatises 
rewritten. 

So  that  the  reader  may  grasp  the  industrial 
situation,  it  will  be  well  to  focus  our  attention 
upon  "Capital,"  the  economic  factotum.  Capital, 
posing  as  a  preferred  partner  in  the  business  of 
production,  claims  a  perpetual  income  called 
"interest,"  while  a  "capitalized"  environment 
calls  for  a  perpetual  income  called  "rent."  As 
land  is  only  an  alternate  form  of  investment,  the 
rent  rate  is  really  a  commuted  interest  rate  and 
hence  both  of  these  incomes  are  interest  in- 
comes, or  "capitalized  incomes."  The  claimants 
of  these  incomes  are  not  the  collective  people, 
but  the  private  owners  of  the  money  privilege 
and  the  private  owners  of  the  land  privilege.  It 
appears,  therefore,  that  private  landlordism  is 
only  an  optional  form  of  private  capitalism  and 
that  private  capitalism  is  the  Alpha  and  Omega 
of  present  economic  doctrine. 

Plainly  speaking,  our  text-books  are  in  effect 
treatises  on  "Private  Capitalism,"  and  concern 
themselves  chiefly  with  theories  of  Interest, 
Capital,  Credit  Finance,  and  other  phenomena 
of  functional  insolvency.  Hence  they  are  written 
from  the  viewpoint  of  the  owners  of  economic 


14  Social  Wrongs  and  State  Responsibilities 

fundamentals,  and  do  not  reflect  the  collective 
interests  of  men. 

The  situation  resolves  itself  therefore  into 
"Private  Capitalism"  versus  the  "Collective 
Effort ;"  that  is  to  say,"Private  Finance"  versus 
the  "Common  Interests."  Private  Finance,  in 
the  guise  of  "capital,"  claims  first  right  to  the 
common  product  and  takes  it.  Then  come  the 
claims  for  maintenance  and  depreciation,  and 
then  wages  and  profits  as  residual  claimants. 

Ordinarily,  defective  functions  and  morbid 
conditions  may  be  mitigated  by  artificial  com- 
pensations, and  just  as  defective  vision  may  be 
relieved  by  optics,  and  defective  hearing  by 
acoustics,  so  defective  solvent  functions  might 
be  improved  by  compensatory  economics.  Un- 
fortunately current  economics  has  utterly  failed 
to  vindicate  its  claims  to  be  a  science.  Not  only 
have  we  been  unable  to  diagnose  the  social  ills, 
but  we  have  been  incompetent  to  differentiate 
between  health  and  disease,  and  have  taken  the 
abnormal  for  the  normal  function. 

Where  permanent  cures  are  available,  it 
would  be  folly  to  apply  palliatives,  yet  a  pallia- 
tive is  better  than  no  relief.  Had  our  political 
controls  equalized  the  wastes  and  costs  of  credit 
finance  through  the  public  taxes,  by  assuming 
the  functions  of  credit  liquidation  as  a  part  of 
the  public  service,  the  solvency  of  values  would 
have  been  made  premiumless.  The  money  f  unc- 


Introduction  15 

tion  being  furnished  free  on  the  usual  securities, 
all  interest  rates  would  terminate  at  once,  and 
"Capital"  become  an  incomeless  value  and  not 
a  sustained  voracity.  Under  such  State-guar- 
anteed solvency,  however,  the  value  of  the  land 
privilege,  as  a  private  possession,  would  rise 
until  its  discount  value  found  its  limitations  in 
the  life-risk  alone,  and  were  man  immortal,  land 
values,  as  the  only  available  source  of  effortless 
income,  would  become  infinitely  great. 

It  seemsy  therefore,  that  all  valuations  under 
Private  Finance  are  based  in  the  "income 
powers"  of  capital — that  is,  in  the  voracities  of 
compound  interest.  "Wealth"  thus  becomes 
identified,  not  with  a  concrete  and  final  value, 
but  with  a  perpetual  flow  of  values  which 
Private  Finance  exacts  from  the  public  on  the 
plea  of  doing  it  a  perpetual  service. 

With  the  interest  rate  at  zero,  however,  there 
could  be  no  "Capitalized  Income"  and  our  feudal 
concepts  of  "wealth"  and  "capital"  would  under- 
go a  profound  modification. 

The  lack  of  a  proper  criterion  of  social  nor- 
mality and  the  failure  to  discover  the  true  law  of 
solvent  functions  have  led  us  wofully  astray 
from  the  paths  of  economic  truth  and  rectitude. 
Wholly  oblivious  of  the  scant  marginal  value  of 
the  metal  basis  and  the  negligible  money-scope 
of  gold,  the  functional  insolvency  of  values  was 
not  even  suspected.  Thus  the  limitations  of  the 


16  Social  Wrongs  and  State  Responsibilities 

metal  basis  came  to  be  misinterpreted  into  a 
general  law  of  money,  and  the  true  law  of  sol- 
vent functions,  and  of  money-scope,  were  buried 
under  cumulative  misapprehensions.  Mean- 
while the  wasteful  compromises  of  economic 
automatism  were  mistaken  for  a  real  money  of 
circulation,  and  "Private  Capitalism,"  as  a  com- 
pensatory expedient,  became  the  paramount 
factor  of  economic  interpretation.  The  wastes 
of  credit  finance  were  coined  into  the  incomes  of 
the  propertied  classes  and  interpreted  into 
"wealth."  Our  handbooks  thus  became  a  sort 
of  Royal  Charter  of  commercial  rights  and 
privileges  by  which  the  propertied  classes  felt 
themselves  entitled  to  collect  money  tithes  from 
the  unpropertied.  Meanwhile  the  wishes  of  the 
latter  were  not  even  consulted.  As,  however, 
the  propertied  classes  had  always  been  in  polit- 
ical control,  the  terms  of  the  charter  were  easily 
enforced. 

By  a  strange  oversight  our  text-book  authors 
failed  to  realize  that  private  capitalism  divided 
men  into  two  classes,  with  interests  apart — that 
the  economics  of  the  "capitalizers"  were  not  the 
economics  of  the  "capitalized,"  and  that  the 
latter  were  not  bound  by  the  predatory  pact. 


VALUE  AND  THE  ECONOMIC  FORMULA 


THE  soul  of  economics  is  its  formula,  and  the 
main  concept  in  that  formula  is  value.  To  ap- 
prehend the  meaning  of  value  is  to  apprehend 
the  meaning  of  the  economic  problem. 

Paradoxical  as  it  may  appear  "value"  is  an 
economic  misfortune  and  "wealth"  a  disaster. 
It  is  only  when  a  thing  costs  productive  sacrifice 
that  we  appraise  it  as  a  "wealth."  Hence  wealth 
is  a  measure  of  nature's  stint  and  man's  pov- 
erty. In  a  paradise  of  costless  abundance  where 
things  might  be  had  for  the  taking,  we  should 
be  rich  in  goods  but  poor  in  wealth.  In  an 
effortless  Eden  there  could  be  no  productive 
sacrifice  and  hence  no  "value,"  and  to  hoard  up 
the  eternally  superfluous  would  be  senseless. 

A  ton  of  water  will  not  exchange  for  a  penny- 
weight of  gold,  though  value  for  value,  every 
drop  of  water  is  infinitely  more  useful  than  a 
pennyweight  of  gold.  But  gold  is  scarce,  that  is, 
difficult  to  produce,  while  of  water  there  is  a 
superabundance.  Hence  we  place  gold  in  the 
category  of  wealth  while  water  does  not  appear 
on  the  list.  Were  water  as  scarce  as  coal,  a  man 
owning  a  lake  of  it  would  become  a  billionaire, 

17 


18  Social  Wrongs  and  State  Responsibilities 

but  it  would  be  a  national  disaster  to  list  it  as 
a  wealth  asset. 

What  a  thing  is  worth  to  us  depends  upon 
the  units  of  productive  sacrifice  we  are  willing 
to  expend  to  obtain  it.  Value  is  an  appraisement 
of  the  sacrifices  of  production,  or  costs  in  terms 
of  productive  effort.  Into  these  costs  enter  the 
wear  and  tear  of  our  physical,  mental,  and 
psychic  processes.  We  capitalize,  as  it  were, 
these  sacrifices,  and  call  them  value.  Hence  all 
value  implies  actual  or  potential  units  of  labor- 
cost  or  units  of  productive  sacrifice. 

If,  for  the  present,  we  regard  the  average 
effort  to  earn  a  dollar,  as  a  unit  of  human  effort, 
and  we  start  with  a  quantity  of  iron  ore  costing 
seventy-five  cents,  there  may  be  produced  from 
it  the  following  values : 

Iron  Bars   worth  $           5.00 

Horse  Shoes   "  10.00 

Needles   "  6,800.00 

Watch  Springs "  200,000.00 

Hair  Springs   "  400,000.00 

(Carroll   D.   Wright — "Industrial   Development  of  the 
United  States.") 

Reducing  these  values  to  units  of  effort,  we 
have: 

For  mining  the  ore %  units 

For  making  iron  bars 5 

For  making  horse  shoes 10 

For  making  needles   6,800 

For  making  watch  springs 200,000 

For  making  hair   springs 400,000 


Value  and  the  Economic  Formula         19 

We  thus  connect  values  with  units  of  produc- 
tive effort  of  which  they  are  the  economic  ex- 
pression, and  hence  it  appears  that,  directly  or 
indirectly,  value  depends  upon  the  labor  cost, 
and  that  goods  will  exchange  for  each  other 
according  to  the  actual  or  potential  units  of 
productive  effort  they  represent.  The  exchange 
of  goods  becomes,  therefore,  an  exchange  of 
services.  Not,  however,  the  producer's  cost,  but 
the  consumer's  bid,  is  the  true  criterion  of 
"labor-cost,"  for  it  is  the  discriminating  public 
which  in  the  last  analysis  sets  the  doctor's  fee 
and  the  artisan's  hire,  appraising  not  alone  the 
values  of  goods  but  the  services  of  the  different 
trades  and  professions  that  produced  them. 

We  produce  special  values  called  goods,  and 
take  in  pay  general,  substitutional,  values  called 
money.  We  expend  units  of  productive  sacrifice 
and  receive  therefore  units  of  "income."  Value, 
from  the  producer's  standpoint  is  measured  in 
units  of  sacrifice,  and  from  the  consumer's 
standpoint  in  units  of  satisfaction.  Hence,  in 
the  last  analysis,  disbursement  of  income  is  an 
exchange  of  units  of  sacrifice  for  units  of  satis- 
faction; and  the  test  of  economic  normality  is 
that  distribution  of  the  common  product  where 
every  average  unit  of  income  represents  an 
average  unit  of  productive  sacrifice. 

We  expend  income  so  as  to  derive  from  it  the 
greatest  number  of  units  of  satisfaction  pos- 


20  Social  Wrongs  and  State  Responsibilities 

sible.  This  gives  rise  to  another  concept  of  value 
based  in  the  estimate  we  place  upon  our  wants 
and  the  goods  that  satisfy  those  wants.  We 
expend  a  certain  proportion  of  our  income  for 
food,  clothing,  shelter,  fuel,  light  and  other  util- 
ities, and  the  amount  of  income  we  expend  for 
each  item  marks  its  relative  importance,  or 
marginal  value,  on  the  chart  of  yearly  expendi- 
ture. Hence  the  average  expenditure  of  income 
upon  a  utility  is  a  criterion  of  the  marginal 
value  of  that  utility. 

Value  may  be  said  to  have  two  dimensions — 
scarcity  and  utility.  A  thing  is  scarce  when  its 
production  offers  great  resistance  to  human 
effort.  It  has  utility  when  it  subserves  some 
useful  purpose  or  satisfies  some  human  want. 
No  matter  how  scarce  a  thing  may  be,  if  it  have 
no  utility  it  will  have  no  exchange  value.  On 
the  other  hand,  no  matter  how  useful  a  thing 
may  be,  if  it  be  eternally  superabundant  it  can- 
not be  classed  as  a  wealth  and  its  exchange  value 
will  be  nil.  Hence,  to  constitute  "wealth"  a 
thing  must  be  both  scarce  and  useful.  Value 
may  therefore  be  defined  as  a  function  of  utility 
on  the  one  hand  and  of  scarcity  on  the  other. 

In  a  strictly  commercial  aspect  the  industrial 
process  may  be  viewed  as  a  flow  of  productive 
values;  in  a  purely  economic  sense  as  a  flow  of 
productive  services ;  and  in  an  ethical  sense  as  a 
flow  of  productive  sacrifices.  Value  as  a  func- 


Value  and  the  Economic  Formula         21 

tion  of  sacrifice  introduces  a  moral  element  into 
economics,  but  because  ethics  and  economics 
refuse  to  harmonize  under  "private  capitalism," 
writers  felt  obliged  to  square  their  theories  to 
fit  supposedly  normal  conditions  by  dodging  the 
moral  issue,  thus  escaping  from  the  inconsist- 
encies of  the  situation.  Sacrifice  has  to  do  with 
morals,  but  satisfaction  has  not ;  hence,  by  inter- 
preting value  in  terms  of  gratified  desire  the 
perplexing  element  of  ethics  could  be  eliminated. 
Its  substitution  put  economics  outside  of  the 
pale  of  applied  justice  and  placed  it  within  the 
pale  of  discretional  morals.  Applied  ethics,  and 
applied  economics,  are,  however,  merely  two 
phases  of  applied  civics,  and  cannot  be  divorced 
from  one  another  without  social  disaster. 

At  best,  however,  there  is  no  way  of  estima- 
ting a  satisfaction.  It  has  no  defined  dimensions 
in  space  or  time,  nor  can  its  connection  with 
productive  effort  be  satisfactorily  established. 
On  the  other  hand,  the  sacrifice  of  productive 
effort  is  a  constant.  It  has  a  defined  limit  in 
fatigue  and  can  be  measured  in  time.  We  can 
measure  the  productive  cost  of  making  watch- 
springs  out  of  a  certain  weight  of  iron  ore,  but 
we  cannot  measure  the  gratification  these 
watch-springs  confer. 

As  has  been  noted,  value  is  a  function  of 
scarcity,  and  scarcity  implies  resistance  offered 
to  productive  effort.  Always  and  everywhere 


22  Social  Wrongs  and  State  Responsibilities 

resistance  interposes  itself  between  man's  ef- 
fort and  his  living,  and  the  scope  of  science  and 
invention  is  to  find  the  ways  and  means  for 
overcoming  such  resistance.  The  flow  of  human 
effort  into  productive  consummation  follows  the 
same  law  as  the  flow  of  electricity  into  work. 
Effort  and  resistance  are  reciprocal  terms.  This 
relationship  may  be  expressed  in  an  equation 
thus:  one  unit  of  productive  potential  E,  ex- 
erted upon  one  unit  of  resistance  R,  will  yield 

•p 

one  unit  of  product  P ;  that  is,  P  =  —        The 

K 

industrial  yield  is  thus  a  function  of  the  envi- 
ronment resistance  on  the  one  hand,  and  of  in- 
dustrial effort  overcoming  that  resistance  on 
the  other.  The  economic  law  is  exactly  paral- 

E 

leled  by  Ohm's  Law  of  electricity  C  =-S-,  where 

K 

E  stands  for  the  electric  potential,  R  for  the 
electric  resistance  and  C  for  the  current  output 
or  product.  The  equation  may  be  simplified,  if, 
instead  of  stating  it  in  terms  of  the  industrial 
resistance  R,  we  express  it  in  terms  of  the  fa- 
cilities of  production  F,  its  reciprocal.  These 
facilities  F  comprise  all  the  physical  efficiencies 
by  which  the  resistance  R  is  overcome.  Substi- 
tuting F  for  R  we  have  P  =  EF,  where  the 
productive  potential  E  is  linked  with  the  phys- 
ical potential  or  facility  F  as  a  co-ordinate  and 
co-equal  factor  of  production.  In  this  equation 


Value  and  the  Economic  Formula         23 

the  constituent  elements  of  human  effort  are 
reduced  to  an  economic  law. 

Contrary  to  the  general  belief,  it  is  the 
mental,  and  not  the  manual  element  in  human 
effort  that  is  the  supreme  factor  of  productive 
achievement.  Not  the  physical  but  the  intellec- 
tual faculties  are  the  moving  forces  and  manip- 
ulative agents  of  productive  consummation.  The 
muscular  powers  of  men  and  animals  and  the 
raw  forces  of  nature  are  only  so  many  tools  of 
production  in  the  hands  of  intellect.  Could  we 
utilize  but  one-tenth  of  the  energy  stored  in  a 
ton  of  coal  we  could  set  loose  the  labor  power  of 
four  thousand  men  working  ten  hours.  But 
these  are  only  "foot-pounds."  What  really 
counts  is  the  mental  potential  or  directive  ca- 
pacity back  of  these  raw  forces.  Without  indus- 
trial initiative  and  directive  capacity,  industry 
must  cease  and  man  perish.  It  may  be  well  to 
explain  that  "productive  potential,"  "mental  po- 
tential," "intellectual  potential,"  "industrial  in- 
itiative," "directive  capacity,"  etc.,  are  alternate 
terms  connoting  the  effort  "E"  overcoming  the 
resistance  "R." 

Human  endeavor  may  be  said  to  resolve  itself 
into  speculative  and  routine  production.  The 
speculative  producer  is  the  organizer  and  co- 
ordinator of  industrial  effort,  devising  and 
inventing  means,  methods,  and  processes  for 
effecting  productive  economies  and  efficiencies. 


24  Social  Wrongs  and  State  Responsibilities 

He  assumes  all  the  risks  and  responsibilities  of 
his  industrial  initiative,  and  carves  out  his 
profits  at  the  marginal  costs  of  production.  The 
routine  producer,  on  the  other  hand,  takes  no 
risks,  assumes  no  responsibilities,  and  sells  his 
risk-discounted  efforts  for  a  stipulated  wage. 
He  is  thus  a  wage-earner  following  the  routine 
of  a  well-established  trade  or  calling. 

While  the  former  is  thrown  upon  his  unaided 
initiative  and  mental  resource,  the  latter  de- 
pends largely  upon  his  acquired  skill  and  pro- 
ductive automatism.  Yet  every  routine  producer 
has  some  industrial  initiative  and  this  differen- 
tiates him  from  a  machine.  He  manipulates  the 
facility  F  for  productive  consummation,  though 
himself  a  tool  in  the  hands  of  his  employer,  who 
guides  his  powers  along  channels  of  productive 
efficiency  and  economy. 

We  may  therefore  say  that  the  factor  E  is  the 
brains,  and  the  factor  F  the  muscle  of  produc- 
tion ;  and  though  it  may  be  difficult  to  determine 
where  initiative  ends  and  automatism  begins,  it 
will  answer  the  purposes  of  the  formula  to 
include  the  human  factor  under  E,  and  the 
mechanical  factor  under  F.  Inasmuch  as  these 
factors  are  correlates,  an  error  in  classification 
will  make  no  difference  to  the  equation. 

The  static  or  physical  efficiencies  included 
under  the  facilities  F,  are  the  following : 


Value  and  the  Economic  Formula         25 

First :  The  environment  potential,  consisting  of 
the  biologic  powers  and  raw  forces  of  nature 
and  the  resources  of  land,  water,  climate,  and 
other  natural  advantages  of  the  common  en- 
vironment. 

Second:  The  mechanical  potential,  consisting 
of  the  tools,  appliances,  machinery  and  in- 
stallations of  production,  together  with  the 
muscular  powers  of  men  and  animals  and  all 
other  stored  powers  for  operating  these  in- 
strumentalities. 

Third:  The  commercial  or  distributive  poten- 
tial, comprising  the  agencies  and  facilities  of 
solvency,  transportation,  and  communication, 
and  the  whole  machinery  of  commerce. 

Fourth :  The  technical  potential,  embracing  all 
public  and  private  schools  and  institutions  of 
technical  learning,  all  libraries,  books  and 
periodicals,  the  public  press  and  other  instru- 
mentalities of  education  conducive  to  indus- 
trial efficiency. 

Fifth :  The  administrative  potential,  consisting 
of  State  and  Church  controls,  courts  of  jus- 
tice, and  other  institutions  of  law  and  order, 
defenses  against  invasion  and  all  public 
works,  buildings  and  structures  for  conserv- 
ing and  augmenting  the  industrial  potential 
of  a  country. 


26  Social  Wrongs  and  State  Responsibilities 

Under  the  intellectual  potential  E  will  be 
understood  the  directive  powers  of  man  to  set 
the  facilities  F  in  motion  for  productive  con- 
summation. 

The  factors  E  and  F  constitute  the  industrial 
potential  of  a  people,  and  this  potential  varies 
with  the  power  of  the  factors  and  the  industrial 
pace.  Where,  during  the  hunting  stage,  some 
twenty-five  individuals  per  hundred  square 
miles  of  land  area  probably  marked  the  average 
limits  of  race  survival,  such  a  territory  is  now 
capable  of  supporting,  on  an  average,  some  ten 
thousand  individuals.  The  industrial  potential 
of  the  present  may  therefore  be  said  to  be  sev- 
eral hundred  times  greater  than  that  of  the 
past. 

The  formula  P  =  EF,  when  properly  applied 
and  interpreted,  should  fit  every  human  rela- 
tion. Whether  the  effort  E  be  expended  con- 
structively or  destructively,  makes  no  difference 
to  the  equation.  Be  the  dividends  P  those  of 
industrial  achievement,  or  of  pious  devotion,  or 
of  diplomatic  forestallment,  or  the  pelf  and 
pillage  of  war,  the  same  elements  enter  into  it, 
namely:  the  intellectual  potential  E  and  the 
means  of  achievement  F. 

The  aim  of  all  collective  endeavor  is  to  reduce 
the  industrial  resistance  R  by  administrative 
measures  F.  Whether  such  measures  concern 
transportation,  communication,  sanitation,  irri- 


Value  and  the  Economic  Formula         27 

gation,  forestation,  conservation  of  public 
resource,  solvency  of  values,  or  other  govern- 
ment functions,  in  every  case,  the  sole  aim  of 
applied  economics  is  to  diminish  the  common 
resistance  R  by  increasing  the  potential  F. 
Hence,  always  and  everywhere,  the  test  ques- 
tions of  political  science  should  be : 

Does  the  administrative  measure  increase  the 
industrial  potential  of  the  people  ?  Does  it  econ- 
omize the  common  effort?  Does  it  make  for  a 
higher* general  standard  of  living?  If  not,  then 
it  is  a  hindrance  R  and  not  a  facility  F. 

How  many  of  our  national  policies  will  pass 
the  economic  test? 

Will  private  capitalism  and  its  wastes  and 
voracities? 

Will  private  landlordism — the  offspring  of 
private  capitalism? 

Will  the  tariffs  and  subsidies  of  predatory 
privilege? 

Will  the  imperialisms  and  war-footings  of  an 
aggressive  commercial  class  ? 

Will  the  insolent  and  predacious  individual- 
ism, around  whose  parasitic  prosperities  are 
grouped  the  collective  interests  of  men  as  a 
mere  incident  and  by-product? 

Will  the  present  systems  of  taxation? 

Will  the  tons  of  statutory  legislation  based  in 
these  policies? 


28  Social  Wrongs  and  State  Responsibilities 

It  should  be  self-evident  that  before  we  may 
enter  upon  an  era  of  enlightened  legislation, 
there  must  be  an  economic  formula  by  which  to 
square  economic  procedure. 

The  invariability  of  the  money  standard  be- 
ing assumed,  the  economic  law  may  be  viewed 
as  a  law  of  wages  and  of  prices,  E  being  the 
wage  factor,  and  F  the  price  factor. 

The  greater  the  pace  E  the  higher  the  wage 
rate;  the  greater  the  potential  F,  the  greater 
the  product  P  in  terms  of  the  wage  rate. 

Of  course  the  true  income  rate  is  the  product 
P.  Assuming  the  pace  E  to  be  constant,  the 
income  P  will  vary  as  the  potential  power  F, 
and  the  factor  F  will  then  appear  to  be  the  true 
criterion  of  a  people's  productive  efficiency  and 
income  capacity. 

Now  of  all  the  classified  facilities  F,  the  "en- 
vironment potential"  is  the  most  important, 
and  the  food  resource  of  that  potential  its  most 
compelling  factor.  Civilizations,  like  armies, 
crawl  upon  their  stomachs;  and  hence  the  ur- 
gencies of  life  become  the  real  factotums  of  the 
wages-level,  and,  other  things  equal,  the  peoples 
owning  the  largest  food  resource  enjoy  the 
highest  wage-rates. 

Diminish,  therefore,  the  per  capita  distribu- 
tive share  of  the  common  resource  and  you  di- 
mmish the  per  capita  wages.  "Scarcity  values" 


Value  and  the  Economic  Formula         29 

are  economic  misfortunes  which  present  inter- 
pretations permit  a  privileged  class  to  capital- 
ize into  effortless  incomes.  Population  pres- 
sure produces  a  "scarcity  value"  in  the  common 
resource,  and  when  such  pressure  is  pushed  be- 
yond the  point  of  greatest  average  productive 
returns,  peoples  enter  upon  a  career  of  low 
standards  of  living  and  industrial  decline. 

The  pressure  of  population  on  resource  is  a 
pressure  on  the  wages-level.  This  is  why  wages 
are  low  iir  overcrowded  countries,  and  where, 
in  addition  to  such  pressure  on  resource,  all 
other  potentials  F  are  undeveloped,  as  in  China, 
Japan,  and  India,  there  the  wage-rates  tend 
toward  the  starvation  limit.  So  great  is  the 
pressure  on  foothold  in  some  parts  of  the  Orient 
that  the  very  sources  of  sustenance  are  polluted, 
and  the  swarming  populations  may  be  said  to 
perish  in  their  own  toxins. 

No  apprehension  need  be  felt  over  a  possible 
decline  of  wage-rates  so  long  as  the  pressure  on 
resource  is  maintained  below  the  point  of  dimin- 
ishing returns.  That  the  wages-level  may  be 
lowered  by  "foreign  competition"  is  the  falla- 
cious argument  of  "protectionism"  and  the  bug- 
aboo of  commercial  exploiters.  Apart  from  the 
economic  benefits  of  a  mutual  interchange  of 
cheap  surpluses,  the  general  prosperity  of  na- 
tions cannot  be  unfavorably  influenced  by  inter- 
national commerce.  Competitive  elimination 


30  Social  Wrongs  and  State  Responsibilities 

may  bring  losses  to  individual  traders  and  affect 
local  industries,  but  they  cannot  but  benefit  the 
common  interests. 

Where  an  industry  is  forced  to  the  wall  by 
outside  competition,  another  and  better  one 
takes  its  place,  the  substitution  of  the  fit  for  the 
unfit  tending  to  increase  the  industrial  potential 
by  guiding  production  along  profitable  channels. 
Were  there  no  economic  benefit  in  the  inter- 
change of  cheap  surpluses,  there  could  be  no 
commerce,  and  were  the  forces  of  competition 
and  elimination  inoperative  we  should  all  de- 
generate and  perish.  If  overcrowded  peoples 
are  obliged  to  sell  their  labor-powers  cheaply  in 
the  common  market,  that  is  their  loss  and  not 
the  loss  of  the  economically  prudent  ones. 
Wages  of  nations  cannot  fall  below  their  per 
capita  productive  output,  and  this  output  de- 
pends upon  population  pressure  and  cannot  be 
reduced  by  an  exchange  of  surpluses. 

The  average  income  is  fixed  by  the  average 
industrial  potential,  and,  incredible  as  it  may 
appear  to  our  Labor  leaders,  the  law  of  average 
income  has  never  been,  and  can  never  be,  set 
aside  by  any  concerted  action  of  organized 
labor.  The  average  income  can  never  overtake 
the  average  product,  and  hence  the  wages-level 
cannot  be  effectively  boosted  without  boosting 
up  the  product-level. 

All  artificially  raised  wages  are  parasites — 


Value  and  the  Economic  Formula         31 

not  on  "capital,"  nor  on  "profits,"  as  is  com- 
monly supposed,  but  upon  the  weaker  and  less 
assertive  trades  and  callings.  The  voracities  of 
capitalism  cannot  be  reached  by  any  changes  in 
wage  rates,  and  as  all  profits  are  made  at  the 
marginal  costs  of  production,  not  only  the  ad- 
vanced wage-rates  but  all  the  risks  and  losses  of 
strikes  must  be  added  to  the  general  cost  of 
living,  which  fall  almost  wholly  upon  the  dis- 
advantaged  classes.  Meanwhile  a  culling  proc- 
ess is  bjusy,  weeding  out  the  incapable  workers 
who  cannot  earn  the  higher  wage,  and  supplant- 
ing them  with  those  who  can.  Where,  by  sheer 
monopoly  advantage,  the  more  powerful  unions 
wring  concessions  from  an  employing  class,  the 
high  rates  invite  into  their  organization  supe- 
rior craftsmen  from  the  outside,  who  gradually, 
but  surely,  raise  the  craft  status  to  a  higher 
plane  of  efficiency,  and  to  whom,  in  the  long  run, 
the  less  efficient  workers  lose  their  places,  or 
take  inferior  positions. 

Nowhere  may  the  results  of  this  selective 
process  be  better  studied  than  among  the  train 
crews  on  American  railways — a  fine  body  of 
men — upon  whom  advancing  wage-rates  have 
imposed  progressively  heavier  duties,  and  more 
exacting  requirements,  until  their  efficiency  has 
been  raised  to  the  level  of  the  higher  pay. 

Meantime,  the  general  advance  in  wage- 
rates,  everywhere  apparent,  is  wholly  due  to 


32  Social  Wrongs  and  State  Responsibilities 

the  depreciation  of  the  metal  basis,  and  not  to 
the  improved  facilities  F,  which  make  them- 
selves felt  in  prices  only. 

Thus,  everywhere,  the  economic  law  tends  to 
assert  itself  in  the  end,  and  nowhere  can  it  be 
set  aside  by  artificial  regulation  or  legislative 
fiat. 

Such,  briefly,  are  some  of  the  deductions  of 
the  economic  formula. 


THE  MONEY  BASIS  AND  THE 
"QUANTITY  THEORY" 

A  STANDARDIZED  substitutional  value,  such  as 
a  dollar,  may  be  defined  as  a  value  achieved 
industrially  by  the  expenditure  of  one  standard 
unit  of  productive  effort  upon  one  standard 
unit  of  industrial  facility  in  a  standard  unit  of 
time. 

Adopting  the  average  labor  required  to  mine 
a  pennyweight  of  gold  (dollar),  as  a  standard 
of  average  human  effort,  then,  a  unit  of  produc- 
tive efficiency  E,  in  terms  of  digging  gold,  is 
that  mental  potential,  which  applied  to  a  unit 
of  industrial  facility  F,  will  produce  one  penny- 
weight of  gold  P;  and  a  unit  of  industrial 
facility  F,  is  a  physical  potential  which  when 
manipulated  by  a  unit  of  productive  efficiency 
E,  will  result  in  a  pennyweight  of  gold  P. 

Of  course  the  economic  unit  must  be  an  aver- 
age unit.  Directly  or  indirectly  nearly  the  whole 
technical  skill  of  a  civilization  goes  into  every 
industrial  act,  and  it  may  be  said  with  truth 


34  Social  Wrongs  and  State  Responsibilities 

that  every  trade  and  calling  of  man  participates 
in  the  making  of  a  pin  or  button.  Not  one  of 
the  thousands  of  special  trades,  professions, 
and  industries  but  has  in  some  way  contributed 
to  the  production  of  these  articles.  As  with  pins 
and  buttons,  so  with  the  mining  of  gold.  The 
whole  world  is,  co-operatively  speaking,  en- 
gaged in  mining  gold,  and  to  trace  and  estimate 
every  contributory  effort  that  goes  into  the  ex- 
traction, smelting,  transportation,  and  distribu- 
tion of  gold  would  be  a  sheer  impossibility. 

Now  if  gold  is  to  be  a  standard  unit  of  value, 
it  should  be  a  value  constant.  While,  however, 
the  sacrifices  of  production  have  remained  con- 
stant from  the  beginnings  of  industry,  products 
have  undergone  a  progressive  devaluation. 

In  the  last  analysis,  all  costs,  and  hence,  all 
values,  find  their  appraisement  in  the  wear  and 
tear  of  nerve  and  muscle.  The  fatigues  and  dis- 
comforts of  productive  effort,  which  are  the 
same  now  as  they  were  thousands  of  years  ago, 
constitute  the  only  invariable  element  in  eco- 
nomic science.  Whether  the  output  per  average 
unit  of  productive  sacrifice  be  large  or  small 
makes  no  difference  to  the  fatigue  and  discom- 
fort of  a  unit  of  labor.  As  English  farm  labor 
receives  to-day  from  six  to  seven  times  as  much 
gold  per  day's  work  as  the  same  labor  received 
in  the  thirteenth  and  fourteenth  centuries,  we 
conclude  that  we  can  produce  from  six  to  seven 


Money  Basis  and  the  Quantity  Theory     35 

times  as  much  gold  per  unit  of  labor  as  we 
could  then. 

Reliable  wages  statistics  will  show  that  the 
mining  of  gold,  in  terms  of  the  average  produc- 
tive effort,  costs  now  only  about  one-sixth  of 
what  it  cost  two  or  three  centuries  ago,  and  that 
it  continues  to  cheapen  (in  terms  of  human 
effort) ,  about  two  per  cent  yearly.  Meanwhile, 
its  marginal  importance  on  the  chart  of  human 
wants,  has  remained  practically  unchanged. 
This  marginal  importance  of  gold,  according  to 
trustworthy  data,  amounts  to  less  than  one-fifth 
of  one  per  cent  of  all  other  values.  In  other 
words,  the  average  man  will  expend  no  more 
than  one-fifth  of  one  per  cent  of  his  income  to 
satisfy  the  gold  want,  whether  gold  be  cheap  or 
dear.  A  unit  of  value  measures  a  unit  of  pro- 
ductive sacrifice,  and  as  we  can  now  mine  six 
times  as  much  gold  per  average  unit  of  sacri- 
fice as  we  could  two  or  three  centuries  ago,  the 
gold  coin  of  today,  to  be  at  par  with  the  gold 
coin  of  the  past,  should  be  six  times  as  large. 

As  the  resistance  of  the  environment  has 
been  overcome  by  the  progressive  technics  and 
improvements  F,  all  the  products  of  industry 
have  been  cheapened — some  faster  than  others. 
Those  that  have  cheapened  faster  than  gold  ap- 
peared to  fall  in  price;  those  that  cheapened 
slower  appeared  to  rise.  For  this  reason  alone 
food-stuffs  have  appeared  to  advance  in  price 


36  Social  Wrongs  and  State  Responsibilities 

while  manufactured  products  appeared  to  fall. 
In  order  to  keep  pace  with  the  progressive  de- 
valuation of  the  gold  unit,  wages  had  to  be  ad- 
vanced along  the  whole  line  of  human  endeavor, 
and  the  industries  of  the  country  have  been  up- 
set and  will  continue  to  be  upset  by  "strikes" 
for  higher  wages  until  the  metal  basis  is  perma- 
nently demonetized. 

The  money  basis  of  an  ideal  currency  should 
be  unlimited  as  to  potential  power  of  solvency. 
In  it  all  circulating  values  should  at  all  times  be 
supersolvent.  But  the  money-scope  of  a  money- 
base  is  no  higher  than  its  potential  marginal 
value.  While  the  marginal  value  of  an  indis- 
pensable utility,  such  as  land,  may  be  forced  up 
indefinitely  by  monopoly,  the  marginal  value  of 
dispensable  things  tend  to  remain  the  same  or 
to  depreciate.  The  marginal  value  of  gold  is 
permanently  limited  by  its  dispensability.  So 
small  is  this  value  that  unaided  by  artificial  ex- 
pedients its  per  capita  money-scope  or  solvent 
power  amounts  to  less  than  30  cents.  In 
fact,  from  the  consumption  of  gold  in  the  arts, 
1890  to  1910  inclusive,  (Report  of  the  Director 
of  the  Mint  for  1911),  it  appears  that  the  aver- 
age per  capita  expenditure  for  the  gold  want 
amounts  to  less  than  twenty-four  cents ! 

On  the  basis  of  its  marginal  importance,  gold 
has  a  solvent  power  of  less  than  one-fifth  of  one 
per  cent  of  the  commercial  values  resting  upon 


Money  Basis  and  the  Quantity  Theory     37 

it.  That  is  to  say,  for  every  five  hundred  units 
of  merchandise  seeking  the  money  function, 
there  is  but  one  unit  of  solvent  power  to  do  the 
money  work.  The  problem  is,  then,  how  to  make 
one  unit  of  solvent  power  liquidate  five  hundred 
circulating  units  of  commerce.  Could  this  single 
money  unit  work  overtime,  and  could  business 
be  run  on  unsecured  promises  of  payment  ma- 
turing in  some  eighty-odd  years,  then,  perhaps, 
liquidation  in  the  gold  basis  might  be  possible 
without  banking  expedients.  But  here  the  com- 
pensations of  nature  come  to  our  assistance,  and 
the  marginal  value  of  gold  is  automatically 
raised  a  hundred  fold  or  more  by  cumulative 
expansion.  By  such  expansion  the  solvent 
power  of  gold  is  advanced  from  a  justifiable 
per  capita  circulation  of  twenty-four  cents  to  a 
circulation  of  twenty-seven  dollars;  and  the 
time  element  is  reduced  proportionately. 

We  are  still  far  from  solvent,  however,  but  by 
organizing  our  insolvency  into  a  circulation  of 
"money  debts"  called  credits,  the  time  element 
may  be  still  further  reduced  and  a  deferred 
solvency  be  achieved.  With  something  like 
twenty-five  thousand  "credit  factories"  to  make 
local  risks  available  as  pledges  of  payment,  and 
a  "show-case"  evidence  of  money  solvency,  we 
are  in  a  position  to  float  a  currency  of  liabilities 
maturing  in  from  thirty  to  ninety  days.  We 
are  now  "solvent"  in  a  wide-flung  network  of 


38  Social  Wrongs  and  State  Responsibilities 

"money  debts,"  or  credits,  which  an  amazing 
class-privilege  permits  a  propertied  minority  to 
coin  into  a  source  of  income. 

The  money  basis  of  an  ideal  circulation 
should  be  the  most  fundamental  and  command- 
ing of  all  values.  But  gold  is  only  a  negligible 
derivative,  and  apart  from  gratifying  the  child- 
ish vanities  of  the  uncultured,  gold  has  no  util- 
ity that  cannot  be  fully  met  by  substitutes. 

When  we  part  with  a  coin,  we  part  with  some- 
thing for  which  there  appears  to  be  no  available 
use  on  the  chart  of  human  wants,  and  hence 
arises  the  idea  that  money  is  merely  a  "title  to 
capital"  and  not  a  competent  value  for  itself. 
In  the  language  of  economic  misinterpretation 
and  apology,  credit  finance  is  said  to  deal  in 
"titles  to  capital."  In  the  language  of  common 
sense,  it  deals  in  the  means  of  solvency.  So 
very  dispensable  is  gold  that  the  whole  stock  of 
it  could  be  dumped  into  the  sea  and  not  be 
missed.  Its  contribution  to  human  happiness  is 
practically  nothing,  and  there  is  good  reason  to 
believe  that  even  its  present  small  marginal  im- 
portance will  shrink  appreciably  when  it  loses 
its  money  privilege  and  prestige. 

It  cannot  be  said,  therefore,  that  gold,  as  a 
money  basis,  measures  up  to  any  of  the  essen- 
tial requirements  of  financial  competency.  As 
a  special  availability  and  money  asset  it  is  prac- 
tically worthless.  Its  exchange  value  varies  with 


Money  Basis  and  the  Quantity  Theory     39 

the  number  of  its  circulating  units,  and  with 
the  cheapening  process  of  extraction.  Its  money- 
scope  is  small,  its  unit  unstable,  and  its  unaided 
power  of  solvency  negligible. 

The  whole  question  of  a  competent  circula- 
tion is  thus  a  question  of  liquefying  and  stand- 
ardizing a  competent  money  asset,  and  the  ques- 
tion of  liquefaction  is  a  question  of  subdividing 
such  an  asset  into  representative  units  of  stand- 
ardized value.  These  units  then  become  a  stand- 
ard of  appraisement  for  the  values  of  commerce. 
The  attributes  of  mobility,  imperishability,  and 
general  availability,  make  the  money  unit  the 
quickest  of  all  assets.  They  invest  it  with  a 
commanding  power  over  all  other  values — the 
power  to  appraise  and  discount  risks.  Every 
money  valuation  is  a  brokerage  transaction  in 
which  the  risks  and  costs  of  depreciation  and 
decay  are  discounted.  We  exchange  the  perish- 
able for  the  imperishable,  the  special  for  the 
universal  value.  But  the  perishable  is  a  risk 
and  the  special  is  a  risk.  We  discount  the  risks 
in  terms  of  a  riskless  money. 

Money  is  a  liquefied  and  standardized  substi- 
tutional  value  in  which  all  products  should  be 
naturally  and  eternally  solvent.  Without  a  sub- 
stitutional  value  to  offer  labor  for  product,  there 
can  be  no  production.  Without  a  substitutional 
value  offered  to  merchants  there  can  be  no  com- 
merce. Without  a  circulation  to  insure  the 


40  Social  Wrongs  and  State  Responsibilities 

solvent  flow  of  values  and  services  there  can  be 
no  industry  and  no  civilization. 

The  premium  on  money  is  thus  a  premium  on 
a  scarcity  of  substitutional  values.  Instead  of 
liquefying  the  largest  national  asset,  we  liquefy 
the  smallest.  Instead  of  a  per  capita  circulation 
of  six  hundred  money-units,  we  have  a  per 
capita  circulation  of  twenty-seven.  If  the  po- 
tential money-scope  of  the  money-base  be  large 
enough  to  hold  the  aggregate  circulating  values 
of  commerce  supersolvent,  then  competitive 
goods  will  meet  competitive  money  and  sol- 
vency will  be  costless.  Under  present  credit 
restrictions  and  scant  money-means,  nine  in- 
dustrial opportunities  are  deferentially  waiting 
upon  one  arrogant  dollar ;  that  is,  opportunities 
are  at  a  discount  and  the  dollar  is  at  a  premium. 
Were  the  liquefied  assets  five  or  more  times 
greater  in  value  than  the  aggregate  values  of 
commerce,  six  eager  dollars  would  be  waiting 
upon  one  opportunity;  that  is,  dollars  would  be 
at  a  discount  and  opportunities  at  a  premium. 
It  is  a  self-evident  proposition  that  where  over- 
whelming money  reserves  press  eternally  upon 
opportunity,  there  monopoly  of  financial,  com- 
mercial, and  industrial  resource  is  impossible. 
With  a  redundancy  of  permanent  liquid  means, 
the  arguments  for  "parsimony"  and  "futurity," 
upon  which  our  theories  of  "capital"  and  "inter- 


Money  Basis  and  the  Quantity  Theory     41 

est"  depend,  would  be  swept  away  in  a  flood  of 
premiumless  money  reserves. 

The  money  question  is  therefore  not  a  ques- 
tion of  flexible  credits  and  a  central  bank  of 
issue,  but  the  question  of  a  money-base  so  large 
in  amplitude  and  potential  value,  that  it  shall 
constitute  the  whole  of  "capital/ '  and  that  all 
the  circulating  values  of  commerce  shall  be 
competitively,  and  hence  costlessly,  solvent  in 
it.  The  underlying  principle  of  solvency  is 
money-scope,  and  the  money-scope  of  an  asset 
depends  upon  its  potential  value. 


SELF-LIQUIDATION   OF   LAND   VALUES. 

RENTS  OF  EQUALIZATION 

vs.  TAXATION 

LOCALIZED  in  the  environment  are  the  latent 
powers  and  efficiencies  of  a  civilization.  Not  the 
physical  values  and  improvements,  but  the  in- 
dustrial potentials,  of  which  these  values  are  an 
externalized  expression,  constitute  the  wealth  of 
nations.  The  industrial  potential  is  a  potential 
capacity  to  achieve  product.  It  is  the  power  of 
maintenance  and  repair  by  which  the  vigor  and 
health  of  the  social  organism  is  maintained.  The 
environment  is  charged  up,  as  it  were,  with  the 
collective  powers  and  efficiencies  of  past  and 
present  civilizations,  such  powers  and  efficien- 
cies manifesting  themselves  as  "land  values." 
A  careful  study  of  census  figures,  and  of  real- 
estate  valuations,  will  show  that  in  1900  the 
ratio  of  land  values  to  physical  values  amounted, 
on  an  average,  to  about  sixty-two  per  cent.  In 
other  words,  "land"  was  then  nearly  twice  as 
valuable  as  the  physical  improvements  upon  it. 
Land  values  are  the  reflected  values  of  con- 

42 


Self-Liquidation  of  Land  Values          43 

structive  economies,  such  as  those  of  trans- 
portation and  communication — those  of  distri- 
bution and  exchange  of  supplies  in  the  common 
market — those  of  exchange  in  professional  and 
industrial  services  in  great  civic  centers — those 
of  water,  light,  heat  and  power  conveniences — 
those  of  collective  drainage,  roadways,  subways, 
and  those  of  other  social  conveniences  by  which 
the  individual  is  enabled  to  live  on  a  highly 
potentialized  plane  of  existence,  enjoying  privi- 
leges worth  billions  of  dollars  without  giving  a 
thought  to  their  costly  maintenance.  They  are 
the  capacities  F  overcoming  the  industrial  re- 
sistance R,  by  which  human  effort  is  conserved 
and  the  sacrifices  of  production  spared.  They 
represent  the  net  difference  between  the  total 
appraised  value  of  a  civilization  and  its  physical 
costs.  These  latent  and  localized  capacities  to 
achieve  product  constitute  the  real  wealth  of  a 
civilization,  and  their  value  may  be  pushed  up 
to  any  figure  by  artificial  scarcity. 

Apart  from  the  values  of  scarcity,  such  "sur- 
plus values"  are  a  criterion  of  man's  achieved 
mastery  over  the  common  resistance.  The  in- 
creased industrial  potential  and  the  increased 
population  pressure  have  raised  the  values 
of  land  in  this  country  from  something  like 
fifty  millions  of  dollars  three  centuries  ago, 
to  about  sixty  billions  of  dollars  to-day.  Being 
the  industrial  reflex  of  the  collective  endeavor 


44  Social  Wrongs  and  State  Responsibilities 

on  the  one  hand,  and  of  population  pressure  on 
the  other,  these  assets  are  public  assets  and  can- 
not be  privately  held  without  upsetting  the  in- 
dustrial equities  of  men. 

These  public  values  constitute  at  once  the 
largest  and  most  imposing  asset  of  a  civiliza- 
tion. Were  they  mobilized  into  a  currency  of 
self-liquidation  on  the  basis  of  a  fair  tax 
appraisement,  and  their  present  owners  given 
the  cash  equivalent  of  their  land  holdings  in 
such  a  currency,  the  environment  could  be  with- 
drawn from  private  possession  without  violat- 
ing any  principle  of  justice. 

The  program  of  self -liquidation  contemplates 
giving  the  land-owners  warrants  in  full  for 
their  title,  and  coining  these  warrants  into  a 
currency  of  quit-claim  payment.  As  sole  land- 
lord, the  State  receives  such  currency  at  its  face 
value  for  the  renting  privilege  and  for  all  public 
debts.  It  demonetizes  gold  and  redeems  it  at 
par  in  the  new  currency.  As  the  logical  cus- 
todian of  private  and  public  savings,  the  State 
furnishes  free  of  charge  the  usual  paper  instru- 
mentalities of  circulation  and  exchange  which 
the  glorifiers  of  capitalism  wrongfully  claim  as 
an  especial  feature  of  the  credit  system. 

By  such  an  administrative  fiat,  the  State 
socializes  the  common  environment,  liquefies 
one-half  of  the  world's  values  into  a  permanent 
currency,  renders  all  commercial  values  solvent 


Self -Liquidation  of  Land  Values          45 

in  the  money-base,  makes  solvency  costless  by 
competitive  money  means,  places  all  men  upon 
an  equalized  footing,  and  invests  society  with  its 
rightful  powers  and  civic  dignities. 

Under  Private  Finance  and  its  privately  en- 
grossed fundamentals,  the  per  capita  wealth  in 
1900  amounted  to  about  twelve  hundred  dollars 
in  "property"  values  and  about  twenty-seven 
dollars  in  "money"  values.  That  is,  there  were 
twelve  hundred  "property  units"  and  twenty- 
seven  ' 'money  units,"  the  former  potentially 
insolvent  in  the  latter.  With  one-half  of  the 
property  values  mobilized  into  a  currency  by 
self -liquidation,  we  should  have  about  six  hun- 
dred "property  units"  and  six  hundred  "money 
units,"  the  former  solvent  in  the  latter.  As, 
however,  the  circulating  values  of  commerce 
comprise  only  about  one-fifth  of  these  residual 
property  units,  such  commercial  values  become 
supersolvent — that  is,  competitively  solvent — 
and  the  money  function  becomes  costless. 

Space  forbids  entering  into  a  further  discus- 
sion of  the  environment  basis  except  to  make 
the  broad  statement,  that  its  critics  were  igno- 
rant of  the  underlying  principles  of  costless 
solvency,  and  hence  were  incompetent  to  pass 
an  opinion  upon  it.  The  various  abortive  at- 
temps  made  by  reformers  and  land  speculators 
in  the  past  to  base  a  currency  in  land  values 
were  conceived  in  profound  ignorance  of  solvent 


46  Social  Wrongs  and  State  Responsibilities 

functions,  and,  except  as  hand-samples  of  blind 
economic  groping,  are  unworthy  of  serious  con- 
sideration. No  bona  fide  attempt  has  ever  been 
made  to  supplant  the  gold  basis  and  to  refuse 
to  receive  its  units  for  taxes.  With  the  absolute 
nationalization  of  all  land  values  by  self -liquida- 
tion and  the  concurrent  demonetization  of  the 
metal  basis,  gold  will  suffer  an  unexpected  fall 
in  price  and  its  redemption  will  entail  a  public 
loss. 

Infinite  in  potential  value,  and  unlimited  in 
potential  money-scope,  the  environment,  as  the 
world's  largest  and  most  compelling  asset,  is  at 
once  the  only  logical  and  only  available  money- 
base,  and  the  land  privilege  as  the  most  uni- 
versal, valuable,  and  indispensable  of  all  privi- 
leges, should  appeal  to  the  popular  imagination 
as  financially  the  most  mobile  and  competent  of 
all  possible  money  bases. 

When  once  standardized,  the  value  of  the  en- 
vironment unit  in  terms  of  the  renting  privilege 
remains  a  fixed  constant.  Whether  the  aggre- 
gate value  of  the  circulating  units  exceeds,  or 
falls  below  the  "capitalized"  value  of  the  land 
asset,  will  make  no  difference  to  the  renting 
power  of  the  money  unit.  It  will  rent  as  much 
land  in  the  one  case  as  in  the  other,  but  an  over- 
issue will  tend  to  cheapen  the  land  privilege  in 
relation  to  all  other  utilities,  and  an  under-issue 
will  tend  to  make  it  relatively  more  precious.  In 


Self -Liquidation  of  Land  Values          47 

the  one  case  the  marginal  value  of  the  renting 
privilege  will  fall  and  in  the  other  it  will  rise. 

In  an  indispensable  asset  like  the  environ- 
ment, which  has  no  economic  limitations  as  to 
potential  value,  the  law  of  "quantity"  or  money- 
scope  is  independent  of  the  marginal  value  of 
the  renting  privilege,  and  finds  its  limitation 
only  in  motives  of  a  psychic  kind.  The  law  of 
money  volume  is  really  a  law  of  private  hoards, 
and  the  law  of  these  hoards  depends  upon 
the  industrial  pace  and  average  thrift  of  a 
people.  Under  our  present  financial  dominion, 
with  its  scant  money  means,  one-half  of  these 
hoards  or  reserves,  consists  in  the  "capitalized" 
values  of  land.  Under  a  decapitalized  finance 
these  values  become  permanently  liquefied  into 
a  currency  and  the  residual  properties  become 
money-solvent.  The  financial  technics  of  the 
supersolvent  future  will  call  for  the  mainte- 
nance of  such  a  per  capita  circulation,  that  the 
predetermined  marginal  value  of  the  renting 
privilege  shall  remain  a  constant. 

Under  public  ownership  the  revenues  from 
land  become  public  revenues.  The  differential 
rent  charge  is  only  a  method  of  equalizing  the 
industrial  opportunities  of  men  by  appraising 
the  values  of  location.  It  is  really  a  method  of 
equalizing  the  common  resistance  R.  The  rent 
charge  is  thus  not  a  tax,  but  the  purchase  price 
of  the  facilities  F,  the  revenues  of  equalization 


48  Social  Wrongs  and  State  Responsibilities 

coming  back  to  society  commuted  into  valuable 
services  and  enhanced  industrial  efficiency. 

Taxation,  in  whatever  form  it  may  be  exer- 
cised, is  an  arbitrary  seizure  of  private 
property.  The  taxing  power  is  a  despotic  power 
that  finds  its  warrant  only  in  the  formative 
stages  of  society  as  a  predatory  expedient  to 
cover  a  predatory  wrong — the  wrong  of  dis- 
environment.  There  can  be  no  just  tax,  and 
there  never  was  a  popular  tax.  By  no  exercise 
of  economic  ingenuity  can  the  load  of  taxation 
be  equalized  by  artificial  assessment.  This  alone 
should  condemn  a  principle  morally  vicious, 
politically  dangerous,  and  economically  unjusti- 
fiable. The  tax  system  is  a  national  school  of 
perjury  and  corruption  of  public  morals.  It 
lowers  the  civic  pride,  degrades  the  public  con- 
science, and  makes  for  dishonesty  in  public  and 
private  life.  The  paramount  function  of  State 
is  to  protect  men  in  their  rights  to  inviolate 
sovereignty,  and  in  their  rights  to  private 
property.  Taxation  aggresses  them  in  both 
these  rights. 


THE  SOLVENCY  OF  VALUES  THE  KEY  TO 

THE  SOCIALIZATION  OF  ECONOMIC 

FUNDAMENTALS 


IF  applied  economics,  as  a  science  of  human 
welfare,  is  to  be  worth  while,  it  should  make 
for  the  equalization  of  the  rewards  and  sacri- 
fices of  production,  and  its  doctrines  must  there- 
fore be  premised  in  equalized  opportunities. 
Man  is  master  of  his  economic  destinies.  He 
can  change,  not  alone  his  environment,  and  his 
physical  organism,  but  his  text-books.  Our  cur- 
rent institutions  find  their  warrant  and  support 
in  our  current  theories,  and  these  theories  are 
inconsistent  with  economic  righteousness. 

Present  interpretations  are  based  in  the  pri- 
vate ownership  of  economic  fundamentals  and 
the  capitalization  of  these  fundamentals  into 
effortless  incomes.  Not  alone  is  the  environment 
privately  held,  but  the  money  function  is  pri- 
vately owned  and  controlled.  Society  is  thus 
divided  into  an  advantaged  and  a  disadvantaged 
class.  The  private  owners  of  economic  funda- 

49 


50  Social  Wrongs  and  State  Responsibilities 

mentals  capitalize  their  advantage  into  a  tribute 
from  the  disadvantaged  and  justify  the  financial 
seizure  as  a  reciprocal  service.  The  question  of 
an  economic  "square  deal"  is  thus  a  question 
of  socializing  these  fundamentals,  and  strange 
as  it  may  appear,  the  key  to  this  socialization 
will  be  found  in  the  solvency  of  values. 

The  mechanics  of  the  industrial  process  de- 
pend upon  the  solvent  flow  of  values  and  serv- 
ices. The  money  of  a  country  is  the  blood-plasm 
of  circulation,  carrying  the  corpuscles  of  nutri- 
tion to  every  organ  and  tissue  of  the  social 
structure.  If  the  serum  of  circulation  be  defi- 
cient, reparatory  processes  arise  to  compensate 
for  the  deficiency  and  become  a  drain  upon  the 
organism.  The  interest-rate  is  such  a  drain, 
and  under  private  capitalism  becomes  a  forfeit 
from  the  unpropertied  to  the  propertied. 

The  dispensability  of  gold  fixed  its  money- 
scope  at  its  marginal  value.  The  exigencies  of 
business,  however,  demanded  the  cumulative  ex- 
pansion of  this  value  to  a  point  where  a  credit 
system  could  be  profitably  operated.  Economic 
automatism  placed  the  time  limit  from  thirty  to 
ninety  days  and  the  money  volume  at  a  hundred 
times  its  marginal  value.  The  general  insol- 
vency could  now  be  mobilized  into  a  circulation 
of  money  debts,  and  a  conditional  solvency  be 
achieved  by  time  expedients.  The  inflation 
stopped  automatically  at  a  point  where  such 


Socialization  of  Economic  Fundamentals  51 

time  expedients  could  be  profitably  operated, 
and  left  no  available  surplus  of  money  means. 
Such  a  chronic  shortage  of  money  assets  was 
keenly  felt,  and  the  whole  history  of  financial 
legislation  has  been  one  sustained  effort  for 
money  volume.  It  soon  became  apparent,  how- 
ever, that  every  attempt  to  expand  the  circula- 
tion beyond  the  inflated  money-scope  resulted 
in  a  depreciation  of  the  money  unit  and  a  de- 
basement of  the  currency. 

Believing  such  depreciation  to  be  a  normal 
phenomenon  of  all  currencies,  the  money-scope 
of  the  metal  basis  was  misinterpreted  into  a  law 
of  money.  No  effort  was  made  to  discover  the 
law  of  solvent  functions,  and  for  want  of  a 
scientific  explanation  of  the  "quantity  theory" 
the  money  unit  came  to  be  regarded  merely  as  a 
standard  by  which  the  real  "wealth"  or  "capital" 
might  be  measured,  and  while  to  this  day  there 
is  no  unanimity  of  opinion  as  to  what  is,  and 
what  is  not  "capital,"  all  authorities  are  fully 
agreed  that  it  is  not,  and  cannot  be,  money.  In 
view  of  the  utter  worthlessness  of  gold  as  a 
utility,  the  most  ardent  champions  of  the  metal 
basis  refuse  to  regard  the  "small  bits  of  metal" 
as  a  competent  substitutional  value  of  final  pay- 
ment. Hence  we  are  taught  that  money  is  a 
"deferred  payment" — a  mere  "token,"  or  "coun- 
ter" of  value — but  not  a  valuable  consideration 
in  itself.  We  have  seen  why  the  gold  coin  cannot 


52  Social  Wrongs  and  State  Responsibilities 

be  taken  seriously  as  a  competent  and  confi- 
dence-inspiring value.  Nevertheless,  gold  is  a 
part  of  the  world's  "capital"  and  the  only  per- 
manently mobilized  and  standardized  portion  of 
it.  1 

What  then  is  the  rest  of  the  world's  "capital" 
but  an  unmobilized  and  unstandardized  substi- 
tutional  value,  that  is  to  say,  an  inchoate  money 
means?  What  is  the  "general  purchasing 
power"  of  our  distinguished  preceptors  but  the 
credit  system  in  movement — that  is,  the  organ- 
ized insolvencies  of  capitalism  in  process  of 
parasitic  liquidation  with  the  risk-discounted 
assets  of  industry  in  pawn?  The  "general  pur- 
chasing power"  is  a  perpetual  flow  of  money 
debts  coined  into  a  perpetual  flow  of  private  in- 
comes by  the  machinery  of  credit. 

Without  "guarantees"  there  can  be  no  credit 
system,  and  without  "capitalized  debts"  and 
risk-discounted  assets,  there  can  be  no  guaran- 
tees. The  public  debts  of  the  world,  incurred 
for  wars  and  war-footings,  constitute  more  than 
one  quarter  of  the  world's  "securities."  These 
"funded"  debts  make  up  the  most  available  and 
most  desirable  assets  of  credit  finance,  and 
hence,  not  only  the  "public  debts"  but  the  wars 
that  produced  them,  came  to  be  regarded  as 
"public  blessings." 

Were  all  values  supersolvent  in  the  money- 
base,  the  term  "capital"  as  an  expedient  of 


Socialization  of  Economic  Fundamentals  53 

morbid  finance  could  not  have  been  thought  of, 
and  "credit,"  except  as  an  evidence  of  insol- 
vency, would  have  had  no  economic  significance. 
In  fact,  our  interest-bearing  notes,  bonds,  mort- 
gages, and  other  funded  voracities,  organized 
for  perpetual  parasitic  liquidation,  loudly  pro- 
claim the  universal  insolvency  of  values,  and  so 
too,  our  "securities,"  our  "guarantees,"  and 
"pledges"  (of  money  payment)  are  mere  verbal 
confessions  of  such  general  insolvency. 

The  worjid  is  insolvent,  and  the  credit  system 
is  only  a  means  of  mobilizing  this  insolvency 
into  a  wide-flung,  panic-laden  circulation  of 
liabilities.  We  are  perpetually  and  wastefully 
"coining"  perishable  assets  into  a  costly  "pur- 
chasing power,"  and  are  thus  manufacturing 
solvency  as  an  article  of  commerce.  We  are 
buying  and  selling  it  over  the  bank  counter  as 
so  much  merchandise.  Like  other  products  of 
commerce,  artificial  solvency  follows  the  law  of 
demand  and  supply,  fluctuating  from  a  scarcity 
value  of  six  cents  on  the  dollar  to  a  panic  price 
where  liquidation  ends  in  disastrous  discounts 
and  business  failures. 

Capitalism  is  "propertyism."  We  are,  so  to 
speak,  "property"  solvent,  that  is,  "asset"  sol- 
vent, but  not  "money"  solvent.  "Propertyism" 
is  a  method  of  achieving  "money"  solvency  by 
offsetting  assets  against  each  other  on  the  pages 
of  a  ledger.  Money  solvency  is  cash  solvency. 


54  Social  Wrongs  and  State  Responsibilities 

Property  solvency  is  credit  solvency.    One  is 
costless,  the  other  costly. 

Property  ism  (capitalism)  is  a  standing  men- 
ace to  the  industrial  stability  and  prosperity  of 
the  world.  It  alone  is  the  cause  of  all  our  panics 
and  depressions.  It  alone  is  responsible  for  the 
vagrancies,  poverties  and  charities  of  unem- 
ployment. Leaking  at  every  joint  through  the 
open  seams  of  capitalism,  and  with  distress  sig- 
nals forever  flying,  the  ship  of  Industry  sails 
the  waters  of  financial  insolvency  with  the 
pumps  of  credit  working  overtime  to  keep  it 
afloat.  Instead  of  being  eternally  supersolvent 
and  financially  independent  of  one  another; 
instead  of  "spot-goods"  exchanging  for  "spot- 
cash"  on  even  terms  without  discount;  instead 
of  daily  adjustments  of  business-gains  and 
losses,  each  day  closing  with  a  clean  slate — we 
are  eternally  subsolvent  and  financially  depend- 
ent; our  material  assets  are  forever  in  pawn 
to  Private  Finance  for  solvent  functions;  our 
books  are  swamped  with  running  accounts, 
delayed  liquidations,  and  chronic  money-debts, 
and  we  live  in  a  constant  state  of  apprehension 
lest  the  scope  of  business  overtake  the  scope  of 
credit  by  trenching  upon  its  cash  guarantees. 
Meanwhile  the  community  is  honeycombed  with 
cumulative  liabilities,  merchants  are  perilously 
interdependent  for  solvent  means,  and  the  busi- 
ness of  the  country  is  on  the  verge  of  insolvency 


Socialization  of  Economic  Fundamentals  55 

and  panic.  One  serious  failure  may  involve  the 
rest,  and  like  a  house  of  cards  bring  down  the 
credit  structure  in  a  heap. 

Our  present  concept  of  capital  is  a  sad  jumble 
of  verbal  inconsistencies  which  much  academic 
discussion  has  failed  to  clear  up.    Apart  from 
the  means  and  instrumentalities  of  production 
F,  what  is  this  "capital"  but  a  money  resource? 
The  credit  system  is  only  a  circulation  of  money 
debts  for  which  the  unstandardized  assets  of 
commerce  stand  sponsors,  while  a  scant  money- 
means  and  costly  banking  processes  perform 
the  wasteful  and  operose  functions  of  delayed 
liquidation.   These  stupendous  values  so  dwarf 
and  overshadow  the  beggarly  money-base  that 
they  come  to  be  regarded  as  the  paramount 
thing,  while  the  circulating  "bits  of  metal,"  the 
only  real  liquidating  factors  of  the  credit  sys- 
tem, are  looked  upon  merely  as  a  "measure"  of 
these  values.    Meanwhile  the  coinage  of  these 
guarantees  of  liquidation  into  means  of  pay- 
ment is  a  continuous  performance,   and  the 
seigniorage,  in  terms  of  interest,  a  perpetual 
cost.  Every  credit  transaction  is  a  lapsed  money 
function  translated  into  a  book  account.    The 
credit  is  not  a  money,  but  a  "promise  to  pay 
money,"  and  credit  finance  is  merely  a  method 
of  bartering  goods  and  values  against  one  an- 
other on  the  pages  of  a  ledger.  The  exchange  is 
effected  by  mutual  cancellation,  the  credit  unit 


56  Social  Wrongs  and  State  Responsibilities 

yielding  up  its  pecuniary  life  in  a  single  trans- 
action, hence,  while  the  money  unit,  when  once 
coined,  is  good  for  indefinite  function,  the  per- 
ishing credit  is  a  currency  of  perpetual  recoin- 
age,  and  hence  of  perpetual  waste  of  function. 
This  waste  of  function  begets  a  bank  charge  of 
two  per  cent  or  more  for  operating  the  credit 
system,  which  added  to  four  per  cent  or  less 
for  the  premium  for  scarcity  of  money  means, 
makes  the  cost  of  artificial  solvency  amount  to 
about  six  per  cent.  The  former  rate  is  a  cost, 
not  of  production,  but  of  compensation,  and  the 
latter  a  cost,  not  of  production,  but  of  an  avoid- 
able scarcity  of  money  means,  both  costs  being 
wasteful  and  uneconomic.  Hence  credit  finance, 
as  a  tool  of  solvency,  is  at  best  a  primitive  and 
wasteful  expedient.  Imagine  the  economies  of 
an  industrial  system  where  the  machinery  of 
production  must  be  daily  replaced  by  a  brand 
new  equipment !  Yet  such  is  the  economy  of  the 
credit  system.  Not  only  do  the  wastes  of  finan- 
cial function  become  a  serious  charge  upon  the 
collective  effort,  but  the  costs  of  credit  solvency, 
as  will  be  seen,  became  a  source  of  profit  to  the 
privileged,  at  the  expense  of  the  unprivileged. 


PRIVATE    CAPITALISM    AND 
EFFORTLESS  INCOME 


PRIVATE  capitalism  is  a  private  institution 
and  the  traffic  in  solvent  functions  is  the  exclu- 
sive privilege  of  the  propertied  classes.  This 
astounding  privilege  confers  upon  private 
finance  a  power  for  evil  which  it  is  difficult  to 
contemplate  with  mental  composure.  To  make 
chattels  of  the  money  function  is  to  make  chat- 
tels of  men.  To  traffic  in  artificial  solvency  is 
to  traffic  in  the  seized  powers  of  industry.  For 
the  State  to  surrender  to  the  vicissitudes  of 
private  enterprise  and  profit  the  most  vital  of 
all  industrial  factors,  is  not  only  to  abdicate  its 
highest  collective  function,  but  to  raise  up 
powerful  financial  masters  to  dominate  and 
feudalize  the  common  people. 

Natural  or  artificial,  material  or  immaterial, 
every  value  and  every  service  bears  the  shop- 
marks  of  private  capitalism,  and  pays  Private 
Finance  a  royalty  of  six  cents  on  the  dollar  for 
the  privilege  of  solvency.  The  whole  world  is 

57 


58  Social  Wrongs  and  State  Responsibilities 

perpetually  in  debt  to  these  private  owners  and 
dispensers  of  solvent  functions  for  the  expense 
of  artificial  liquidation.  Every  dollar's  worth 
of  property  is  actually  and  potentially  a  "money 
debt"  for  the  cost  of  solvency  incurred  in  its 
industrial  development,  and  the  world's  values 
are  a  huge  capitalized  debt  in  perpetual  dis- 
count and  liquidation.  For  these  costs  the  prop- 
ertied collect  from  the  unpropertied  a  charge 
called  interest.  They  collect  it  through  a  pri- 
vately capitalized  environment,  a  privately 
capitalized  industry  and  a  privately  capitalized 
commerce.  This  tribute  appears  as  an  added 
cost  to  living.  It  is  exacted  in  enhanced  prices 
and  advanced  rent  charges.  It  becomes  a  per- 
petual lien  on  the  property  less — a  mortgage  on 
the  earnings  of  the  producer  which  he  is  power- 
less to  lift. 

As  this  charge  falls  actually  and  potentially 
upon  every  unit  of  the  average  per  capita 
wealth,  a  conservative  estimate  will  show  that, 
to  the  propertyless,  such  a  tax  represents  fully 
twenty-five  per  cent  or  more  of  the  average  in- 
come of  the  wage-earner.  Thus  the  unproper- 
tied worker  is  in  perpetual  bondage  to  private 
finance  for  one  quarter  of  his  services.  He  is 
one-fourth  slave  and  three-fourths  freeman. 
The  bond  markets  of  the  world  are  only  so  many 
State-protected  slave  markets  where  the  finan- 
cially-seized labor  powers  of  the  unpropertied 


Private  Capitalism  59 

are  marked  down  to  the  highest  bidder.  Ten 
thousand  dollars'  worth  of  sustained  solvent 
functions  will  purchase  the  labor  powers  of  a 
man  forever,  and  neither  sickness  nor  death 
can  terminate  the  "bondage,"  for  it  capitalizes 
the  born  and  mortgages  the  unborn.  Unlike 
chattel  slavery,  its  crude  and  brutal  alternative, 
capitalism  is  a  refined  and  genteel  method  of 
appropriating  a  service.  It  avoids  the  unpleas- 
antness and  responsibility  of  outright  slavery 
and  .thus  spares  the  finer  sensibilities.  It  has 
furthermore  the  sanction  of  economic  author- 
ity, and  this  salves  the  conscience  of  the  learned 
and  mollifies  the  feelings  of  the  charitable. 

A  composite  curve  of  wealth  drawn  from  ap- 
proximate data  will  show  that  about  five  per 
cent  of  the  people  are  above  the  line  of  aver- 
age property  possession,  two  per  cent  on  the 
line,  and  ninety-three  per  cent  below  the  line. 
Under  our  present  controls  the  five  per  cent 
above  the  line  become  parasites  upon  the  ninety- 
three  per  cent  below  the  line.  There  is  abso- 
lutely no  escape  from  the  financial  vampirism 
unless  one  is  on  the  neutral  line  of  average 
property  possession,  where  these  voracities  are 
balanced  against  each  other.  To  be  above  the 
line  is  to  "draw  income."  To  be  below  the  line 
is  to  "yield  income/'  the  largest  economic  for- 
feit being  wrung  from  the  poorest  and  most 
helpless  members  of  society. 


60  Social  Wrongs  and  State  Responsibilities 

Had  the  wasteful  costs  of  capitalism  been 
equalized  through  the  taxes  by  operating  the 
credit  system  as  a  State  function,  the  spoliation 
of  the  unpropertied  by  the  propertied  might 
have  been  avoided.  Under  such  public  finance 
the  costs  of  the  credit  system  would  have  fallen 
equally  upon  the  propertied  and  unpropertied 
and  been  felt  as  a  common  loss.  But  under  pri- 
vate finance  the  capitalizers  could  shift  the 
whole  loss  upon  the  capitalized,  and  convert  the 
privilege  of  liquidation  into  a  source  of  income. 
Thus  the  propertied  classes  not  only  escaped 
their  own  just  share  of  the  national  loss,  but  by 
shifting  it  upon  the  unpropertied,  they  were 
enabled  to  capitalize  the  common  distress  and 
their  class  advantage  into  fabulous  private  for- 
tunes. Some  of  these  fortunes  are  over  one  hun- 
dred and  fifty  thousand  times  the  average  per 
capita  wealth;  and  so  great  is  the  voracity  of 
capitalism,  that  nothing  but  the  brevity  of  life 
has  saved  mankind  from  having  become  the 
feudal  property  of  one  supreme  parasite. 

These  stupendous  fortunes  easily  organize 
themselves  into  irresponsible  personal  controls 
and  feudal  dominions.  They  give  rise  to  a  lordly 
leisured  class  not  only  independent  of  the  indus- 
trial process  and  outside  of  the  law  of  recipro- 
cal service,  but  wholly  separated  from  the  aims 
and  interests  of  the  common  people  whose  sub- 
stance it  devours.  This  class,  with  its  feudal 


Private  Capitalism  61 

training  has  feudal  leanings  and  imperialist 
ambitions.  Being  industrially  foot-loose  it  be- 
comes politically  busy  hatching  schemes  of 
empire  and  the  subjugation  of  alien  races  by 
re-enforced  war-footings  and  strongly  central- 
ized governments,  for  Imperialism  begets  mili- 
tarism. These  men  have  always  been,  and  are 
now,  a  standing  menace  to  free  institutions. 

All  perversions  of  economic  justice  have  their 
source  in  feudal  advantage.  Without  the  pri- 
vate "usurpation  of  economic  fundamentals, 
which  gave  rise  to  effortless  affluence  and  arbi- 
trary power,  there  could  have  been  no  class 
dominions,  no  wars,  no  slaveries,  no  serfdoms 
and  other  characteristics  of  the  predatory  stage 
of  man's  social  beginnings.  It  is  only  because  of 
such  violations  of  economic  equity  and  opportu- 
nity that  all  attempts  to  establish  a  real  democ- 
racy have  failed.  Democracies  cannot  flourish 
in  a  soil  suitable  only  for  growing  artificial  dis- 
parities in  the  livings  of  men.  Yet  upon  such 
feudal  foundations  stand  the  governments  of 
the  world,  and  upon  such  feudal  bases  rest  our 
theories  and  doctrines  of  political  science ! 

We  capitalize  the  wastes  of  functional  insol- 
vency into  parasitic  incomes,  appraise  the  vo- 
racities of  capitalism  as  a  private  "wealth,"  and 
list  the  seized  powers  of  the  unpropertied  pro- 
ducers as  a  national  asset!  Meanwhile,  capital- 
ism has  no  justification  in  public  expediency.  It 


62  Social  Wrongs  and  State  Responsibilities 

is  a  hindrance  R,  and  not  a  facility  F.  It  is 
wasteful,  not  economic — a  loss  and  not  a  gain — 
an  illness  and  not  a  health.  It  is  a  consuming 
force  and  not  a  producing  power. 

The  "capitalized  income"  as  a  doctrine  of 
normal  economics  has  never  been  seriously 
questioned  by  our  text-books,  although  prac- 
tically every  writer  has  thought  it  his  duty  to 
apologize  for  it.  The  justification  is  sought  in 
the  alleged  "productivity"  of  capital,  such  pro- 
ductivity giving  rise  to  "surplus  value."  But 
the  wealth  assets  of  nations  are  not  as  "pro- 
ductive" as  the  free  utilities  of  nature.  Not  all 
the  "capital"  of  the  world  is  as  important  to 
production  as  the  air  we  breathe,  the  water  we 
drink,  or  the  reproductive  powers  of  nature 
upon  which  we  depend  for  our  subsistence. 
Without  either  one  of  these  urgencies  man 
would  perish  before  he  turned  a  wheel. 

How  much  "surplus  value"  shall  be  written 
off  for  the  "usufruct"  of  air?  How  much  for 
water?  How  much  for  the  reproductive  forces 
of  nature?  How  much  for  the  light  and  heat 
of  the  sun?  And  who  is  entitled  to  collect  this 
tribute?  Capital  has  its  wage  of  function  in 
perpetual  upkeep.  Why  then  should  it  demand 
a  bonus? 

In  this  rivalry  among  the  factors  of  produc- 
tion, what  about  the  real  productive  agent  with- 
out which  there  could  be  no  capital?  The 


Private  Capitalism  63 

Southern  aristocrats  wrote  off  for  the  interest 
rate  on  their  capitalized  slaves.  Why,  then,  may 
not  free  Labor  write  off  for  an  interest  charge 
on  its  capitalized  powers?  Why  can  it  not  at 
least  share  in  its  own  despoilment?  The  situa- 
tion is  absurd,  and  any  attempt  to  justify  it 
unworthy  of  common  intelligence. 

Effortless  incomes  are  wrung  out  of  monopo- 
lized urgencies.  They  come  from  the  unwar- 
ranted monopoly  of  economic  fundamentals, 
and  not  from  any  reciprocal  service  rendered  to 
society.  Engross  any  of  the  free  urgencies  and 
you  may  feudalize  the  world,  for  they  become 
"capital"  and  demand  "income."  Industry  is 
not  helped,  but  held  up;  incomes  are  not 
yielded,  but  exacted. 

The  theories  of  interest  have  no  better  stand- 
ing. We  are  taught,  for  instance,  that  "capital" 
is  scarce  and  perishable — that  it  must  be 
"snatched  from  the  jaws  of  appetite,"  and  that 
interest  is  the  reward  of  abstinence.  Yet  the 
forbearance  of  men  is  not  motived  in  usury,  but 
in  providence,  and  providence  is  not  based  in 
self-sacrifice,  but  in  self-interest;  for  were  the 
penalties  of  providence  greater  than  the  re- 
wards, there  could  be  no  "saving  instinct." 

Usury,  however,  is  based,  not  so  much  in  the 
optional  forbearance  of  the  rich,  as  in  the  en- 
forced self-denial  of  the  poor.  The  sacrifices  of 
"saving  capital"  are  vicarious.  The  "financed" 


64  Social  Wrongs  and  State  Responsibilities 

masses  are  obliged  to  practice  the  most  rigid 
economies,  stinting,  pinching,  and  denying 
themselves,  so  that  their  financial  masters  may 
profit  by  their  "abstinence,"  and  live  in  para- 
sitic extravagance  and  splendor. 

It  cannot  be  said,  moreover,  that  the  interest 
rate  is  due  to  a  scarcity  of  "capital,"  when  the 
credits  of  the  country  constitute  less  than 
ten  per  cent  of  the  aggregate  assets;  nor  that 
capital  is  perishable,  when  one-half  of  these 
assets  are  permanent  and  indestructible.  The 
scarcity  is  not  in  concrete  values,  but  in  liquid 
values. 

Because  some  men  underrate  future  enjoy- 
ments for  present  enjoyments,  and  present 
goods  appear  to  have  a  greater  value  than 
future  goods,  we  are  taught  that  such  under- 
valuation is  the  cause  of  the  interest  rate. 
Were  this  true,  then  rural  populations,  where 
interest  rates  are  high,  underestimate  the 
future  more  than  city  populations,  where  the 
rates  are  low,  and  there  is  hence  a  sliding  scale 
in  the  estimation  of  present  and  future  values 
according  to  where  men  live.  Then  again,  as 
our  industrial  potential  rises,  and  efficiency 
overtakes  our  wants  with  a  generous  surplus, 
the  "saving  of  capital"  may  not  be  as  impor- 
tant as  its  overproduction,  and  hence  the  justi- 
fication of  interest  as  a  function  of  sacrifice  is 
weakened.  Furthermore,  only  children  and 


Private  Capitalism  65 

degenerates  undervalue  future  realizations,  and 
they  cannot  influence  the  interest  rate.  Men  do 
not  live  for  themselves  but  for  their  families, 
and  the  civilization  of  the  world  is  the  civiliza- 
tion of  the  provident,  the  improvident  and  their 
breed  being  marked  for  elimination.  Of  course, 
to  a  starving  man,  a  dollar  to-day  may  be  worth 
more  than  a  million  to-morrow ;  but  the  urgen- 
cies of  the  necessitous  cannot  organize  them- 
selves into  a  general  tax  on  the  means  of  sol- 
vency. •  ** 

Normally  there  is  no  economic  advantage  in 
present  possession  except  that  based  in  the  life- 
risk,  which  seems  to  be  confused  with  the  time 
element  of  delayed  liquidation.  Because  life 
is  short  and  death  an  ever-present  contingency, 
some  men  will  discount  the  uncertain  for  the 
certain  and  sell  a  right  to  future  income  at  a 
loss.  Such  a  discount,  however,  is  not  an 
interest  rate,  and  can  bind  no  one  to  its  terms 
but  those  directly  concerned. 

The  notion  that  interest  is  paid  for  "capital" 
and  not  for  the  solvent  function,  is  one  of  those 
clever  expedients  of  perplexed  genius,  which  by 
side-stepping  difficult  questions  and  side-track- 
ing embarrassing  problems,  is  enabled  to  give 
error  the  countenance  of  truth.  Probably  noth- 
ing will  interest  the  future  student  more  than 
the  waste  of  mental  resource  and  ingenuity  in 
defending  and  perpetuating  error,  where  a 


66  Social  Wrongs  and  State  Responsibilities 

smaller  expenditure  of  intellect  would  have 
sufficed  to  discover  an  unassailable  premise.  We 
have  been  in  a  state  of  mental  inhibition  which 
prevented  us  from  perceiving  the  simple  truth 
that  our  credit  system  is  a  patchwork  of  com- 
pensatory and  panic-laden  expedients  of  sol- 
vency, and  that  the  interest  rate  is  the  measure 
of  the  cost  and  wastes  of  artificial  liquidation. 

We  were  aware  that  the  "money  value"  of 
gold  was  out  of  all  proportion  to  its  utility 
value,  and  yet  we  saw  nothing  wrong  with  the 
money  basis. 

We  noted  the  narrow  money-scope  of  the 
"precious  metals,"  but  failed  to  interpret  the 
meaning  of  the  "quantity  theory." 

The  wild  fluctuations  of  the  stock  market 
traced  our  industrial  delirium  in  rising  peaks 
of  financial  frenzy  and  descending  troughs  of 
insolvent  ruin ;  but  we  saw  nothing  wrong  with 
the  credit  system. 

We  perceived  society  falling  apart  into  two 
distinct  classes  with  interests  antagonized,  and 
social  disparities  enormously  exaggerated;  and 
yet  we  saw  nothing  wrong  with  our  text-books. 

With  all  these  pathologic  symptoms  and  the 
industrial  fever-chart  staring  us  in  the  face,  we 
failed  to  diagnose  the  morbid  situation. 

Yet  had  the  money  function  been  a  public 
function,  and  the  land  privilege  the  common 
privilege,  there  could  have  been  no  annuities 


Private  Capitalism  67 

from  fundamentals.  Had  all  values  been  fluid  in 
the  money-base,  solvency  would  have  been  cost- 
less, and  the  lame  apologies  for  "capitalized 
income"  and  the  dozen  or  more  impossible 
theories  of  interest  would  have  been  left 
unuttered. 


PRIVATE  FINANCE  IS  A  MONOPOLY  OF 
SOLVENT  FUNCTIONS 


PRIVATE  FINANCE  is  a  private  monopoly  of 
solvent  means,  and  whatever  limited  competi- 
tion we  have  enjoyed  under  the  credit  system 
has  become  a  vanishing  advantage  since  the 
advent  of  trust  combinations  and  mergers. 

Although  the  national  assets  are  superabund- 
ant, there  never  was  a  time  when  capital  as  a 
money  resource  overtook  the  industries  of  any 
nation.  There  is  no  premiumless  capital;  that 
is,  there  is  no  costless  money  function.  Solvency 
is  costly,  and  credits  must  be  trimmed  down  to 
the  marginal  needs  of  business  emergency,  leav- 
ing no  idle  surplus  of  liquid  means  wherewith 
to  challenge  the  formidable  combinations  of  pri- 
vate capital.  There  is  no  profit  in  bank  reserves. 
This  is  why  bankers  want  an  elastic  currency, 
which  in  times  of  money  dearth  may  be 
stretched  to  meet  the  demands  of  business,  and 
in  times  of  "redundancy"  be  contracted,  so  as 
to  keep  the  circulation  within  those  nice  limits 


The  Monopoly  of  Solvent  Functions       69 

where  every  dollar  will  be  "earning"  interest 
and  where  prices  will  remain  unaffected.  Un- 
less every  dollar  is  busy  drawing  interest  bank 
stocks  will  depreciate.  Hence  a  competitive 
redundancy  of  money-means,  by  which  to  dis- 
pute the  financial  monopoly,  is  incompatible 
with  credit  finance,  whose  natural  limitations 
find  their  expression  in  an  interest  forfeit.  In 
fact  the  credit  system  and  the  interest  charge 
are  the  offspring  of  subsolvent  conditions,  and 
such  cohdifions  are  incompatible  with  idle,  and 
hence  premiumless,  reserves. 

A  monopoly  of  solvent  means  fixes  the  scope 
of  business  and  places  society  under  the  abso- 
lute dominion  of  a  few  overlords  of  private 
finance,  who  can  set  aside  the  laws  of  competi- 
tion and  nullify  the  safeguards  of  economic 
automatism.  The  admissions  of  Judge  Gary  and 
Mr.  Carnegie  before  the  Stanley  Committee 
should  convince  the  glorifiers  of  the  credit  sys- 
tem that  Private  Finance  is  a  private  monopoly 
of  solvent  means,  and  that  until  overthrown, 
nothing  but  State  interference  can  save  us  from 
financial  absolutism  and  a  closed  business 
monopoly.  In  the  face  of  these  admissions,  what 
becomes  of  economic  automatism  as  a  self -regu- 
lating principle  and  the  sheet-anchor  of  polit- 
ical science?  If  anything  is  well  established  in 
economics,  it  is,  that  the  State  cannot  and 
should  not  regulate  prices  and  wages,  and  that 


70  Social  Wrongs  and  State  Responsibilities 

the  law  of  competitive  demand  and  supply  is 
alone  the  sure  criterion  of  what  they  shall  be. 
It  is  the  duty  of  State  to  prevent  monopoly,  not 
to  regulate  it — to  promote  competition,  not  to 
control  it  by  statute.  The  fact  is,  that  our  pri- 
vate capitalism  has  made  a  sorry  mess  of  our 
economic  theories,  and  led  us  into  inconsis- 
tencies more  and  more  irreconcilable  with  any 
rational  scheme  of  social  mechanics. 

It  stands  to  reason,  that  before  we  may  have 
competitive  business,  we  must  have  competitive 
money-means.  It  is  self-evident  that  there  can 
be  no  idle  reserves  where  solvency  is  at  a  pre- 
mium, and  that  hence,  there  can  be  no  competi- 
tive money-means  under  Private  Finance. 

The  traffic  in  economic  fundamentals  is  a 
traffic  in  human  lives,  to  say  nothing  of  human 
rights;  and  yet  our  present  theories  and  doc- 
trines are  based  in  such  private  commerce.  The 
environment  is  the  collective  resource,  and  cost- 
less solvency  the  collective  right  and  privilege; 
and  yet  both  land  and  the  money  function  are 
privately  engrossed  for  tribute. 

Divested  of  all  verbal  subleties  and  ambigui- 
ties, our  so-called  "science  of  wealth"  is  really 
the  science  of  manipulating  the  voracities  of 
capitalism  for  private  profit.  Our  conception  of 
wealth  is  a  feudal  concept.  Wealth,  as  we  have 
seen,  is  a  function  of  scarcity,  and  scarcity  may 
be  artificially  produced  by  monopolizing  the 


The  Monopoly  of  Solvent  Functions       71 

urgencies.  The  pressure  of  population  on  the 
public  resource  does  not  produce  "wealth"  in 
the  sense  of  a  general  prosperity,  but  it  creates 
a  scarcity  in  the  common  resource,  which  pri- 
vate owners  of  land  may  "capitalize"  into 
private  wealth.  In  other  words,  the  urgencies  of 
the  poor  may  be  translated  into  the  wealth  of 
the  rich.  Place  the  fence  of  monopoly  around 
the  free  utilities  and  you  have  wealth  and  riches 
within  the  enclosure  in  so  far  as  you  have  stint 
and  poverty  without.  Were  the  environment  the 
collective  property  of  men,  and  did  public  policy 
demand  a  conservation  of  public  lands  by  ad- 
vanced rent  rates,  such  an  enhancement  of  land 
values  would  be  felt  as  a  public  calamity,  and 
such  public  wealth  viewed  as  a  disaster.  But 
under  private  ownership  the  stints  and  misfor- 
tunes of  the  disenvironed  may  be  capitalized 
into  the  incomes  of  an  owning  class.  Thus, 
while  under  public  ownership  the  law  of  Mal- 
thus  operates  alike  on  the  propertied  and  un- 
propertied,  under  private  ownership  this  law 
becomes  a  tool  for  the  enrichment  of  the  former 
and  impoverishment  of  the  latter.  The  land 
owner  not  only  escapes  all  payments  of  land 
rent,  but  is  enabled  to  demand  services  from  the 
landless.  What  applies  to  private  landlordism, 
applies  to  private  capitalism,  the  parent  of  all 
financial  voracities — for  the  only  moral  support 
for  the  "capitalized  income"  from  land,  comes 


72  Social  Wrongs  and  State  Responsibilities 

from  the  interest  rate  on  "Capital."  Without 
such  support  the  great  wrong  of  private  owner- 
ship would  have  become  apparent  to  all  men. 
Pressure  of  population  on  land  gives  rise  to  a 
scarcity  value  in  public  resource.  Pressure  of 
business  on  solvent  means  gives  rise  to  a  scar- 
city value  of  solvent  functions.  We  appraise  the 
scarcity  values  of  a  privately  owned  renting 
privilege  in  terms  of  the  scarcity  value  of  a  pri- 
vately owned  money  privilege,  and  thus  lay  the 
foundation  for  our  predatory  concept  of 
"Wealth"  and  "Capitalized  Income."  Hence, 
"scarcity  values,"  which  our  census  statistics 
list  as  a  national  asset,  are  not  a  public 
"wealth,"  but  only  a  predatory  means  by  which 
the  labor  powers  of  the  socially  disadvantaged 
may  be  appropriated  without  recompense. 

In  the  last  analysis,  all  wealth  implies  ability 
to  demand  the  services  of  society.  So  long  as 
such  services  are  reciprocal,  the  private  wealth 
of  individuals  is  merely  a  measure  of  the  just 
claims  such  individuals  have  on  society  for  serv- 
ices actually  rendered.  There  can  be  no  injus- 
tice in  such  private  wealth.  Indeed,  the  founda- 
tions of  any  rational  scheme  of  society  must  be 
laid  in  the  inviolate  rights  of  private  property, 
and  it  is  only  because  these  rights  have  been 
infringed  under  present  arrangements  that  we 
have  a  social  problem.  Sharing  the  common 
economic  misapprehension,  and  wholly  oblivi- 


The  Monopoly  of  Solvent  Functions       73 

ous  of  the  hidden  black-mask  and  dark-lantern 
of  Private  Finance,  alias  "Capital,"  Proudhon 
overlooked  the  real  culprit  when  he  charged 
"Private  Property"  with  the  crime  of  "rob- 
bery." It  is  not  Private  Property,  but  Private 
Capitalism  that  is  the  Raffles  of  industry.  It  is 
Private  Capitalism,  in  the  canonicals  of  author- 
ity and  the  cloak  of  Science,  that  makes  effort- 
less income  appear  socially  respectable  and 
economically  justifiable.  While  noisily  pro- 
claiming the  "sacredness"  of  private  property, 
it  robs  the  unpropertied  and  divides  the  plun- 
der with  the  propertied. 

The  incomes  of  capitalism  are  seized  incomes. 
Beyond  the  privilege  of  perpetual  upkeep 
(wages  of  function),  and  the  privilege  to  ex- 
ploit the  risks  of  commerce  and  industry  for 
profit,  capital  has  no  economic  right  to  any 
bonus,  and  under  supersolvent  conditions  will 
become  a  flat,  incomeless  value. 


OUR  COMMERCIAL  DOMINIONS 


INSTEAD  of  being  under  the  impersonal  laws 
of  science,  and  the  administration  of  economic 
experts  capable  of  interpreting  and  applying 
them  to  social  needs,  we  have  been  in  the  past, 
and  are  in  the  present,  under  the  dominion  of 
mercantile  empirics. 

The  functional  insolvency  of  values  in  the 
money-base  vested  the  commercial  classes  with 
the  dangerous  powers  and  responsibilities  of 
artificial  solvency,  and  their  self-imposed  duties 
and  responsibilities  came  to  be  regarded  as  a 
part  of  the  distributive  function.  Practically 
the  whole  technics  of  what  is  called  "business," 
consists  in  the  ability  to  maintain  solvent  func- 
tions under  insolvent  conditions,  the  solvent 
flow  of  goods  and  services  depending  wholly 
upon  the  private  owners  and  manipulators  of 
credit  means.  "Take  care  of  business  and  busi- 
ness will  take  care  of  prosperity,"  we  are  ad- 
monished. "Industry  waits  upon  business  and 
fails  when  business  fails,"  we  are  warned.  The 

74 


Commercial  Dominions  75 

inference  is  plain;  to  be  industrially  saved  we 
must  stimulate  business — that  is,  we  must  tax 
the  "producer"  for  the  benefit  of  the  "distribu- 
ter." To  enlarge  the  profits  of  business  we  must 
go  into  wasteful  production :  we  must  set  legis- 
lative barriers  to  competition  and  so  divert  the 
industrial  effort  into  artificial  and  wasteful 
channels  of  production. 

Private  Finance  blends  manufacturer,  trader 
and  capitalizer  into  one  supreme  factor — the 
"businessman" — upon  whose  ability  to  remain 
solvent,  hang  the  industrial  destinies  of  the 
"financed"  and  "tariffed"  producer.  The  integ- 
rity of  the  industrial  process  depends  upon  the 
sustained  integrity  of  the  credit  system.  This 
sustained  integrity  depends  in  turn  upon  two 
contingencies.  First:  There  must  be  no  busi- 
ness failures ;  and  Second :  The  scope  of  busi- 
ness must  not  overtake  the  scope  of  credit. 
Either  alternative  will  precipitate  a  panic  and 
arrest  the  industrial  process.  Hence  the  exag- 
gerated importance  of  the  commercial  classes  as 
supreme  factors  of  the  industrial  movement. 

The  world  is  organized  and  run  as  a  mercan- 
tile institution.  Our  State  controls  are  com- 
mercial controls,  and  public  policies  are  shaped 
by,  and  for,  commercial  interests.  Current 
standards  are  commercial  standards.  Current 
economics  are  commercial  economics.  The 
world's  governments  are  the  mouthpieces  of  the 


76  Social  Wrongs  and  State  Responsibilities 

trading  classes,  and  our  congresses  and  parlia- 
ments are  the  Upper  and  Lower  Chambers  of 
Commerce. 

We  tax  cheapness  and  subsidize  dearness  to 
boost  the  profits  of  commercial  exploiters.  We 
prematurely  exhaust  the  resources  of  the  coun- 
try by  the  overproduction  of  steel,  oil,  lumber, 
and  other  raw  materials,  in  order  to  enlarge 
their  parasitic  fortunes;  and  we  even  permit 
them  to  defraud  and  poison  us  with  adulterated 
foods  and  drugs  to  further  swell  their  exag- 
gerated incomes.  We  perceive  the  dishonesty 
of  diluting  sugar  with  glucose  and  coffee  with 
beans,  but  overlook  the  larger  dishonesty  of 
diluting  four  or  five  hundred  other  items  with 
a  tariff  impost;  and  while  resenting  the  petit 
larceny  of  the  misbrander  and  debaser,  we 
remain  blind  to  the  grand  larceny  of  the  tariff  - 
taxer. 

The  spectacular  prosperities  of  private 
finance  and  of  privileged  commerce  loom  up  so 
large  in  the  economic  eye  that  they  monopolize 
its  field  of  vision.  It  does  not  occur  to  our  pros- 
perity shouters  that  the  rapacities  F  in  the  eco- 
nomics of  the  advantaged,  become  the  voracities 
R  in  the  equation  of  the  disadvantaged ;  and 
that  such  vampirism  is  at  the  root  of  all  our 
social  iniquities  and  miseries.  It  should  be  obvi- 
ous that  the  distributing  classes  cannot  be 
more  important  to  society  than  the  producing 


Commercial  Dominions  77 

classes;  and  that  the  social  dividend  P  cannot 
be  increased  by  placing  obstacles  R,  in  the  path 
of  the  economies  F  of  commercial  interchange. 

Unjust  institutions  seek  refuge  in  arma- 
ments. The  imperialisms  and  militarisms  have 
always  been,  and  are  now,  the  distinctive  fea- 
tures of  commercial  dominions.  The  world's 
competitive  products  are  distributed  under 
emulative  war-footings  instead  of  emulative 
decency  and  fair  play.  The  governments  of 
nations  are  so  many  military  and  diplomatic 
expedients  of  commercial  aggression  and  ra- 
pacity, and  their  cabinets  the  fiscal  agents  of 
resident  and  self-expatriated  commercial  ex- 
ploiters. 

Behind  every  war  (waged  ostensibly  for  the 
public  benefit)  there  lurks  some  local  class  ad- 
vantage magnified  into  national  importance,  and 
back  of  it  stands  the  banker  and  the  financier. 

We  assume  the  quarrels  of  these  exploiters; 
we  tax  ourselves  for  their  militarisms  and 
otherwise  commit  ourselves  to  their  interna- 
tional rivalries  and  war-footings  on  the  plea  of 
"patriotism"  and  the  fallacious  belief  that  com- 
mercial forestallment  and  an  "open  door"  are  a 
guarantee  of  an  enlarged  field  of  employment. 
Meanwhile,  the  world's  market  is  not  a  means 
of  multiplying  opportunities  of  employment, 
but  only  a  means  of  economizing  the  common 
effort  by  distributing  the  world's  industries 


78  Social  Wrongs  and  State  Responsibilities 

according  to  their  marginal  importance  to  the 
common  need.  Furthermore,  except  as  a  piti- 
ful dupe  and  vassal,  the  feudalized  producer  has 
no  economic  or  "patriotic"  interest  in  the  mili- 
tarisms and  war-footings  of  his  economic  over- 
lords. Stop  the  source  of  idle  income  and  the 
power  to  tax,  and  there  remain  no  incentives 
for  territorial  encroachments,  and  no  valid  ex- 
cuse for  organized  violence. 

The  history  of  private  finance  and  its  com- 
mercial dominions  is  a  history  of  social  up- 
heaval and  economic  antagonism.  Financially, 
we  are  in  a  state  of  chronic  insolvency;  indus- 
trially, in  a  state  of  potential  panic ;  socially,  on 
the  point  of  insurrection,  and  internationally  on 
the  brink  of  war. 

No  one  will  seriously  contend  that  traffic  in 
economic  fundamentals  and  the  exploitation  of 
the  voracities  of  credit  finance  confer  any  bene- 
fit on  mankind;  and  yet  practically  all  the 
energies  of  the  parasitically  advantaged  go  into 
the  manipulation  and  exploitation  of  these  vo- 
racities. It  requires  no  high  order  of  intelligence 
to  set  the  leech  of  capitalism  to  the  artery  of 
labor,  nor  to  organize  its  parasitic  powers  into 
monopoly  profits  by  mergers  and  consolidations. 
Yet  practically  all  the  services  of  the  financial 
classes  are  of  that  order — services  which  could 
be  dispensed  with  under  supersolvent  condi- 
tions. The  functions  of  the  commercial  classes 


Commercial  Dominions  79 

are  not  financial  but  distributive.  It  cannot  be 
said  that  these  functions  are  more  important  to 
the  community  than  those  of  the  inventor  class 
or  of  the  professional  classes. 

Our  civilization  can  never  repay  the  Edisons, 
Bells  and  Burbanks,  to  say  nothing  of  the  Dar- 
wins,  Pasteurs,  and  their  kind;  but  aside  from 
a  few  of  the  former  who  may  have  risen  to 
fortune,  is  it  reasonable  to  believe  that  the 
useful  services  rendered  society  by  the  four  or 
five  thousand  millionaire  traders,  real-estate 
speculators  and  financiers  of  this  country  are 
on  the  average  worth  more  than  the  average 
income  of  the  professional  classes?  It  is  quite 
safe  to  say  that  all  the  incomes  of  the  million- 
aire class  over  and  above  such  an  average  are 
wholly  outside  of  the  law  of  reciprocal  service 
and  therefore  purely  parasitic.  It  would  of 
course  be  foolish  to  underrate  the  abilities  of 
these  men  so  wastef  ully  misapplied  under  pres- 
ent conditions.  Their  parasitic  advantage  makes 
them  independent  of  the  industrial  process  and 
places  them  above  the  common  interests.  Being 
outside  of  the  law  of  reciprocal  service,  they  are 
enabled  to  live  in  effortless  magnificence  and 
luxury  wholly  apart  from  the  strivings  of  the 
common  herd  upon  whom  they  prey,  and  whom 
they  mock  by  their  unapproachable  extrava- 
gance and  feudal  standards  of  living. 

Were  their  class-interests  the  common  inter- 


80  Social  Wrongs  and  State  Responsibilities 

ests — the  welfare  of  each  depending  upon  the 
welfare  of  all — civic  pride  would  not  be  iden- 
tified with  "real-estate  booms,"  artificial  "busi- 
ness expansions,"  and  other  private  prosperities 
based  in  the  exploitation  of  usurped  funda- 
mentals and  population  pressures,  but  would 
concern  itself  with  the  general  welfare  and 
higher  planes  of  living. 

Were  their  interests  the  same,  the  root  causes 
of  corruption,  bribery,  jobbery,  and  inefficiency 
in  public  office  would  be  removed. 

Were  their  interests  identical,  there  could  be 
no  "sweat-shops,"  no  child  labor,  no  exhausting 
hours  of  employment,  no  tenement-house  evils, 
and  no  civic  ugliness.  Such  conditions  would 
be  incompatible  with  public  expediency  and 
economic  efficiency. 

As  it  is,  these  men  and  their  capitalisms  stand 
for  industrial  wastes  and  social  sufferings  that 
stagger  the  imagination.  The  social  recourse  is 
the  self-liquidation  of  fundamentals.  Socialize 
the  idle  income  and  the  face  of  civilization  will 
be  changed. 

Self-liquidation  will  decapitalize  the  money 
function,  defeudalize  industry,  demilitarize 
commerce,  and  decommercialize  our  political 
controls.  Shorn  of  their  financial  power  and 
confronted  on  every  hand  with  vast  incomeless 
liquid  means  competing  for  investment,  the 
commercial  classes  will  be  thrown  upon  their 


Commercial  Dominions  81 

competitive  abilities,  and  like  all  other  pro- 
ducers in  the  field  of  reciprocal  endeavor,  be 
called  upon  to  establish  their  true  marginal  im- 
portance to  society.  It  will  then  be  a  matter  of 
profound  indifference  to  the  worker  whether 
locally,  nationally,  or  internationally,  the  trad- 
ing classes  are  successful  or  unsuccessful  in 
their  business  rivalries,  so  long  as  he  is  not 
taxed  for  their  militarisms  and  can  get  his 
wares  in  the  open  market  at  their  competitive 
price.  .Wither  they  fail  or  do  not  fail,  will 
make  no  difference  to  the  industrial  and  finan- 
cial stability  of  the  country. 


THE   ECONOMIC   RESPONSIBILITIES 
OF    STATE 


PUBLIC  expediency  demands  the  socialization 
of  all  natural  monopolies.  Not  alone  the  eco- 
nomic fundamentals,  but  the  means  of  transpor- 
tation, communication,  distribution,  and  all 
other  monopolizable  public  privileges  should  be 
socialized  by  self -liquidation.  The  law  of  equal 
opportunity,  as  the  law  of  public  expediency, 
should  be  the  basic  law  of  political  science.  No 
government  can  long  endure  whose  foundations 
have  not  been  laid  in  economic  righteousness, 
and  sooner  or  later  all  organic  laws  of  nations 
will  have  to  pass  the  tests  of  economic  fitness 
and  expediency  in  the  Courts  of  Science. 

It  would  of  course  be  a  waste  of  time  to  argue 
with  those  who  still  believe  that  "governments" 
are  divinely  ordained  and  their  rulers  super- 
nally  inspired.  To  believe  that  Supernal  Wis- 
dom had  anything  to  do  with  our  predatorily 
based  and  feudally  conducted  governments  is  to 
believe  that  rank  economic  stupidity  and  folly 

82 


The  Economic  Responsibilities  of  State    83 

constitute  Supernal  Wisdom.  If  economic  jus- 
tice is  the  criterion  of  a  normally  constituted 
State,  then,  not  a  government  on  earth  deserves 
to-day  the  name  of  "State." 

It  may  be  said,  in  a  constructive  sense,  that 
all  governments  have  entered  into  an  alliance 
with  a  financial  class  to  rob  the  public  by  capi- 
talism, and  with  a  commercial  class  to  exploit  it 
by  tariffs  and  subsidies.  Without  imputing  any- 
thing but  the  best  motives  to  our  financial  and 
commercial  ^controls,  no  one  will  maintain  that 
the  present  governments  and  their  economics 
represent  the  common  interests  of  men. 

Now  the  State,  as  the  foster-parent  of  private 
capitalism,  must  be  held  responsible  for  what- 
ever social  injustice  may  flow  from  it.  Society 
in  its  corporate  sense  has  no  defendable  right 
to  confer  titles  of  private  ownership  to  eco- 
nomic fundamentals,  and  thus  to  hand  over 
one  class  of  men  for  financial  spoliation  by 
another. 

It  is  the  paramount  duty  of  the  State  to 
equalize  the  industrial  opportunities  of  men,  in 
default  of  which  it  should  be  held  liable  for  all 
damages  and  losses  due  to  its  administrative 
incapacity  or  neglect.  It  is  the  duty  of  the  State 
to  abolish  private  capitalism  and  socialize  idle 
income  by  costless  solvency,  or  failing  to  do  so, 
to  maintain  all  men  on  an  equality  of  property 
possession. 


84  Social  Wrongs  and  State  Responsibilities 

No  arguments  for  the  overthrow  of  unjust 
institutions  are  so  potent  as  those  which  suc- 
cessfully assail  defective  economic  foundations 
and  the  organic  laws  based  upon  them.  Chal- 
lenge the  integrity  of  these  foundations  with 
conclusive  evidence  and  the  social  edifice  must 
crumble. 

The  constitution  of  the  United  States,  with 
honest  intent,  stipulates  that  no  man  shall  for- 
feit his  property  without  due  process  of  law, 
and  yet  the  State  is  responsible  for  economic 
conditions  that  nullify  this  provision,  and  there- 
fore every  man  beflow  the  line  of  average  wealth 
has  a  right  of  action  against  the  government 
for  economic  larceny.  Ninety-three  per  cent  of 
the  people  are  robbed  by  capitalism.  All  but 
one-tenth  of  one  per  cent  are  robbed  by  tariff 
laws.  All  but  a  few  speculators  are  impover- 
ished by  panic  industrialism,  and  practically  all 
are  aggressed  in  person,  property,  and  liberty, 
by  the  taxing  power.  For  any  of  these  injuries 
men  have  a  right  of  action  against  the  State, 
and  the  first  case  for  the  plaintiffs  will  do  more 
for  the  cause  of  social  reconstruction  than  all 
the  French  Revolutions  and  other  popular  up- 
risings have  ever  done  or  can  ever  do. 

Our  social  arrangements  are  fundamentally 
dishonest,  and  our  political  controls  must  be 
held  constructively  to  blame  for  the  dishonesty. 
Capitalism  and  its  feudal  dominions  are  on  trial 


The  Economic  Responsibilities  of  State    85 


for  wholesale  robbery.  The  plaintiff  is  the  Rou- 
tine Producer,  some  ninety  millions  strong,  and 
his  case  is  as  strong  as  his  number.  Let  him 
bring  suit  through  competent  counsel,  and  eco- 
nomic feudalism  and  its  text-books  are  doomed. 
According  to  the  wealth  curve  shown  here- 
with, the  distribution  per  family  for  1900  may 
be  classified  as  follows: 


Class 

Per 

Cent 

Fortunes 

First  Estatef.  

0.1 

Six  to  nine  figures. 

Second  Estate  

0.9 

Five  to  six  figures. 

Third  Estate  

4.0 

$6,000  to  $10,000. 

Neutral  Estate  

2.0 

$5,000  to  $6,000. 

Fourth  Estate  

93.0 

Below  $5,000. 

100.0 

If  the  latest  estimates  of  Mr.  Rockefeller's 
holdings  are  to  be  believed,  the  curve  of 
ultra-parasitism  and  irresponsible  power  rises 
abruptly  into  space  nearly  a  mile,  that  is,  nine 
thousand  times  higher  than  the  one-hundred- 
thousand-dollar  level,  and  more  than  one  hun- 
dred and  fifty  thousand  times  higher  than  the 
average  wealth  line.  And  if  our  text-books  are 
to  be  taken  seriously,  Mr.  Rockefeller  has  con- 
ferred such  vast  benefits  on  humanity  that  it 
will  require  the  collective  effort  of  ninety  thou- 
sand average  men,  working  forever,  to  pay  for 
them! 

Parasitism  is  a  universal  phenomenon.  One- 
half  of  the  world  devours  the  other  half.  Con- 


86  Social  Wrongs  and  State  Responsibilities 

sideration  and  forbearance  have  never  been  a 
test  of  survival  on  the  physical  plane  of  evolu- 
tion, nor  have  they  as  yet  become  a  criterion  of 
biologic  fitness  on  the  psychic  plane.  There  is  a 
benevolent  parasitism,  however,  wherein  host 
and  parasite  live  in  an  amicable  reciprocity  of 
functions.  This  happy  state  is  called  symbiosis. 
Perhaps  the  leisured  classes  may  even  now  be 
economically  vindicated  on  the  score  of  such 
reciprocal  consortism? 

All  civilizations  arose  parasitically  from  the 
vitals  of  Industry,  but  neither  host  nor  parasite 
was  aware  of  the  social  symbiosis.  Without 
leisure  there  could  have  been  no  learning,  and 
without  learning  no  social  advancement  and  no 
civilization.  Hence  the  predatory  seizures  and 
parasitisms  of  the  past  find  their  justification 
in  evolutionary  expediency. 

The  civilizations  of  the  world  have  always 
been,  and  are  now,  the  civilizations  of  the  para- 
sitically advantaged.  Probably  less  than  one- 
tenth  of  one  per  cent  of  the  community — the 
feudal  efflorescence  of  private  capitalism — is  in 
absolute  control  of  our  social  and  political  ar- 
rangements. Back  of  these  controls  stand  the 
survived  institutions  of  social  growth  and  de- 
velopment with  their  roots  deep  in  the  soil  of 
feudal  tradition  and  dominion.  These  controls 
and  their  champions  and  supporters  make  up  all 
there  is  of  the  "State"  and  the  "Society"  of  our 


The  Economic  Responsibilities  of  State    87 

day.  Conspicuous  in  the  civic  foreground  they 
stand,  class-conscious,  and  socially  apart  from 
the  routine  producers  out  of  whose  bonded  and 
mortgaged  powers  their  spectacular  fortunes 
are  wrung.  The  stage-properties  of  civic  life 
and  the  machinery  of  government  are  in  their 
hands.  They  control  all  the  avenues  of  social 
advantage,  monopolize  all  the  higher  luxuries 
and  amenities,  parade  their  ostentatious  and 
unapproachable  livings  in  vassaled  splendor, 
obstruct  OUT  highways  with  their  liveried  con- 
veyances, and  exhaust  all  the  resources  and 
possibilities  of  exaggerated  income.  They  im- 
pose their  feudal  ideals  and  standards  upon  the 
stupid  host,  establish  class  differentiations  and 
distinctions,  fix  the  social  boundaries,  enact 
the  canons  of  leisured  gentility,  prescribe  the 
punctilios  of  polite  convention,  and  set  the  pace 
of  emulative  parasitism  and  extravagance.  It 
is  their  civilization  and  they  are  the  civic  cul- 
mination and  expression  of  its  economics. 

Being  the  evolutionary  product  of  such  ar- 
rangements, and  lacking  a  criterion  of  social 
normality,  we  are  incapable  of  social  self- 
introspection  and  self-analysis.  Meanwhile  these 
institutions  are  intimately  interwoven  into  one 
another  by  endless  conventions  and  habits,  and 
firmly  held  together  by  thousands  of  private 
and  class  interests.  So  nicely  are  they  fitted  in- 
to the  feudal  scheme  of  things  that  but  few 


88  Social  Wrongs  and  State  Responsibilities 

perceive  their  abnormality  or  suspect  their 
transitory  character.  We  are  apt  to  forget  that 
the  very  essence  of  life  is  eternal  change,  and 
that  nothing  is  permanent  in  nature  but  the 
Evolutionary  Impulse,  of  which  this  change  is 
a  panoramic  expression  and  manifestation. 
Even  atoms  change  their  subatomic  equiva- 
lences, and  chemistries  their  mathematical 
formulae. 

We  ascribe  greater  permanency  to  human 
institutions  than  they  possess  and  greatly  over- 
estimate the  civilization  of  our  age.  Yet  on  the 
dial-plate  of  social  advancement  we  are  still 
close  to  the  zero  point  of  economic  achievement. 
Chattel  slavery  is  still  fresh  in  the  minds  of  a 
million  pensioners  in  these  United  States,  and 
serfdom  in  Austria  and  Russia  has  not  yet 
faded  out  of  the  memory  of  the  living.  We  still 
decide  economic  problems  by  opinion,  and  inter- 
national questions  by  violence.  Our  "best  citi- 
zens" quench  their  elemental  ferocities  in  brutal 
lynchings  and  burnings  and  Christianity  mur- 
ders Jews  in  holy  Russia  and  pious  Roumania. 
The  torch  of  the  Spanish  inquisition  died  out 
less  than  a  century  ago.  The  despotic  controls 
and  disciplines  of  crude  and  rudimentary  civili- 
zations are  apotheosized  into  celestial  kingdoms, 
and  great  masses  of  mankind  live  their  narrow, 
ritualized,  and  dominated  lives,  in  superstitious 
fear.  More  than  ninety  per  cent  of  the  human 


The  Economic  Responsibilities  of  State    89 

race  live  in  abdicated  selfhood,  with  their  sov- 
ereign powers  in  trust  to  some  usurping  despot, 
and  the  vast  majority  are  feudalized  by  the 
owners  and  exploiters  of  economic  funda- 
mentals. The  history  of  mankind  is  a  history  of 
paternal  dominion.  Man  was  born  and  reared 
in  an  atmosphere  of  feudal  control,  and  he  lived 
and  died  under  the  rule  of  despotic  dynasties 
arrogating  to  themselves  absolute  powers  over 
his  person.  Dominion  pursued  him  from  the 
cradle  to  the  grave,  until  the  monarchic  idea 
became  a  dominating  concept  capable  of  being 
expanded  into  a  cosmic  principle  upon  which  a 
universe  might  be  built.  Man  is  only  now  be- 
ginning to  recover  from  his  feudal  obsession, 
and  the  story  of  political  reform  is  a  story  of 
his  struggle  to  redeem  his  sovereign  powers 
from  the  grasp  of  personal  dominion  and  pa- 
ternal control.  Every  Magna  Charta  of  enlarged 
freedom  is  a  record  of  some  partial  redemption 
of  his  economic  rights,  and  the  movement  for 
personal  sovereignty  cannot  cease  until  all  do- 
minions and  paternalisms  are  swept  away,  and 
man  and  woman  shall  stand  forth  in  equal  dig- 
nity and  freedom,  acknowledging  no  dominion 
and  no  power  but  that  of  the  underlying  Verity 
and  Spontaneity  of  things  which  finds  its  inter- 
pretation in  the  laws  of  science. 

No  one  is  to  blame,  however,  for  our  intol- 
erable conditions;  our  social  miseries  and  dis- 


90  Social  Wrongs  and  State  Responsibilities 

parities  were  not  made  to  order,  but  grew  out  of 
our  evolutionary  immaturity  and  necessity.  No 
hard  and  fast  lines  separate  the  different  classes 
of  men,  and  the  privilege  of  economic  vampir- 
ism is  not  monopolized,  but  is  open  to  anyone 
capable  of  overtaking  the  voracities  consuming 
him  and  of  rising  to  the  parasitic  level  of  prop- 
ertyism  where  he  may  put  on  the  screws  of 
private  finance  and  push  the  button  of  com- 
pound interest.  As  parasites  tend  rather  to  in- 
crease in  size  than  in  numbers,  any  accession  of 
parasites  from  the  outside  is  followed  by  corre- 
sponding and  possibly  greater  defection  from 
the  inside,  and  hence  the  number  of  the  host 
class  has  no  tendency  to  diminish.  The  privilege 
to  share  in  his  own  despoilment,  therefore,  con- 
fers no  benefit  upon  the  routine  producer  who 
bears  the  whole  load  of  economic  iniquity.  From 
the  prostrate  body  of  Labor  rises  the  ladder  of 
"Capitalized  Income,"  with  its  topmost  rung 
one  hundred  and  fifty  thousand  times  higher 
than  the  average  wealth  line.  In  order  that  a 
diminishing  percentage  of  the  parasitically 
advantaged  may  mount  the  rungs  of  idle  in- 
come, an  increasing  percentage  of  the  disad- 
vantaged  must  be  content  to  hold  the  ladder. 
Hence  the  shallowness  of  the  argument  that  all 
men  may  achieve  success  and  prosperity  under 
present  arrangements. 
It  is  no  disparagement  to  individuals  that 


The  Economic  Responsibilities  of  State    91 

they  take  advantage  of  conditions  the  funda- 
mental injustice  of  which  they  do  not  even  sus- 
pect. Social  equality  does  not  imply  equality  of 
fortune,  but  only  equality  of  right  to  economic 
fundamentals.  There  will  be  disparities  in  for- 
tunes just  so  long  as  there  are  disparities  in 
brains,  but  such  disparities  can  violate  no 
equities  where  incomes  from  fundamental 
urgencies  have  been  socialized. 

It  is  no  more  a  disgrace  to  rise  above  the 
average '  of  property  possession  than  to  rise 
above  the  average  of  intelligence,  and  yet  under 
our  financial  vampirism  every  capable  man  who 
accumulates  a  well-earned  competence  becomes 
a  parasite  upon  those  who  are  below  the  line  of 
average  wealth.  All  normal  men  are  honest  and 
desire  fair  play,  and  the  most  ardent  and  most 
influential  reformers  come  from  the  ranks  of 
the  parasitically  advantaged.  When  once  the 
enormity  of  present  interpretations  is  realized, 
such  men  will  not  be  the  last  to  demand  a  thor- 
oughgoing reform. 

Sooner  or  later  the  intellectually  advantaged, 
whether  they  wish  it  or  not,  become  parasit- 
ically advantaged ;  and  thus  in  a  way,  it  may  be 
said,  that  the  parasitically  advantaged  belong 
to  the  class  we  have  called  "speculative  pro- 
ducers," while  the  disadvantaged  belong  to  the 
class  designated  as  "routine  producers."  While 
the  routine  producer  contributed  nothing  but 


92  Social  Wrongs  and  State  Responsibilities 

his  muscle  and  acquired  automatism  to  the  civ- 
ilization of  his  age,  the  speculative  producer 
furnished  the  brains  and  became  the  social  in- 
itiative and  movement.  He  seized  the  environ- 
ment and  became  a  landlord.  He  seized  the 
primitive  money-means  and  became  a  capitalist. 
These  tremendous  powers  made  him  absolute 
master  of  the  economic  situation,  and  reduced 
the  worker  to  a  state  of  vassalage. 

Had  our  theories  been  based  in  equalized  op- 
portunities, our  economic  interpretations  could 
not  have  been  reconciled  with  the  servitudes 
and  subordinations  of  feudal  dominion.  It  is 
only  because  the  slaveries  and  serfdoms  of  the 
past  were  not  found  inconsistent  with  current 
economics,  that  they  persisted  so  long  and  gave 
way  only  when  the  moral  sense  of  mankind  re- 
volted against  them.  We  still  speak  of  the 
"working  classes"  and  the  "servant  question" 
from  that  lofty  "leisure-class"  point  of  view 
which  perceives  fixed  class  differentiations 
among  men,  and  even  our  text-book  writers 
assume,  unwittingly,  a  patronizing,  class-con- 
scious tone  in  dealing  with  the  labor  problem. 
A  very  superficial  self -introspection  will  prove 
that  we  are  feudal  to  the  core — that  our  dress, 
our  drama,  our  fiction,  our  social  conventions 
and  standards,  and  even  our  religious  ideals,  all 
proclaim  a  feudal  ancestry.  Yet  we  are,  in  effect, 
one  and  the  same  man,  and  though  endlessly 


The  Economic  Responsibilities  of  State    93 

differentiated  by  environment,  our  economic 
destinies  are  identical.  Equalize  all  opportuni- 
ties, and  the  decapitalized  world  will  be  over- 
run by  potential  Morgans  and  Carnegies  and 
other  speculative  producers  competing  for  live- 
lihoods not  incompatible  with  the  incomes  of 
other  callings,  and  not  inconsistent  with  the 
law  of  reciprocal  service. 

The  fact  confronts  us  everywhere,  that  so- 
ciety is  divided  into  two  distinct  classes  whose 
interests  .are-  apart.  There  are  the  "owners" 
and  the  "owned" — the  lords  of  the  environment 
and  the  disenvironed  renters — the  lords  of  pri- 
vate finance  and  the  ultimate  renters  of  solvent 
functions — the  capitalizers  and  the  capitalized 
— the  tariff-taxers  and  the  tariff-taxed — in 
short,  the  advantaged  and  the  disadvantaged. 

Everywhere  the  advantaged  constitute  them- 
selves the  initiative  and  referendum  of  all  social 
and  industrial  movements,  write  their  own 
class-economics,  and  operate  the  machinery  of 
civilization  to  suit  their  especial  class  interests. 
Everywhere,  too,  the  disadvantaged  have  been 
overlooked  as  co-operative  human  factors,  and 
like  the  yoked  ox  and  harnessed  horse,  have 
been  left  outside  the  pale  of  economic  interpre- 
tation except  as  an  exploitable  facility  F  in  the 
hands  of  a  capitalizing  agent  E. 

The  hopelessness  of  the  routine  producer  was 
pathetically  set  forth  by  classical  economists  in 


94  Social  Wrongs  and  State  Responsibilities 

an  "iron  law  of  wages,"  and  his  elimination  at 
the  margin  of  subsistence  explained  by  the  law 
of  Malthus.  Meanwhile  the  voracities  of  capi- 
talism and  landlordism  were  devouring  his  sub- 
stance and  piling  up  effortless  incomes  for  his 
feudal  masters  and  economic  mentors.  We  saw 
the  parasite  in  the  glory  of  his  effortless  pos- 
sessions and  secret  power,  but  we  overlooked 
the  host.  We  perceived  the  "Income"  side  of 
economics  but  failed  to  see  the  "Outgo"  side. 
We  interpreted  into  our  texts  the  interests  of 
the  advantaged  five  per  cent,  but  ignored  the 
interests  of  the  disadvantaged  ninety-three  per 
cent.  The  tumor,  and  the  body  it  feeds  on,  have 
separate  processes  and  separate  economics.  We 
mistook  pathology  for  hygiology,  wrote  a  treat- 
ise on  morbid  states  and  functions,  and  called  it 
"political  science." 

Brainless  Labor  is  only  a  stupid  beast  of 
burden,  neither  able  to  voice  its  industrial 
wrongs,  nor  to  correct  them.  Modern  educa- 
tional facilities  have  raised  the  "brother  to  the 
ox"  to  the  intellectual  plane  of  his  economic 
overlords,  and  hence  the  unrest  and  discontent 
everywhere  prevailing,  and  the  demand  for  so- 
cial reform.  The  social  question  is  not  a  question 
of  compensatory  meliorism,  as  our  political  con- 
trols imagine,  but  a  question  of  fundamental 
justice.  It  is  not  a  question  of  legislative  ex- 
pedients, but  a  question  of  applied  economics, 


The  Economic  Responsibilities  of  State    95 

which  in  the  new  interpretation  is  coincident 
with  applied  justice.  No  reformer,  whether 
Individualist,  Socialist,  Single-Taxer  or  Trade- 
Unionist,  demands  for  his  system  more  than 
simple  economic  justice — the  justice  of  equal 
industrial  opportunity.  In  the  socialization  of 
land  values  and  natural  monopolies  by  self- 
liquidation,  all  the  demands  of  social  justice  are 
fully  met  and  all  the  aims  of  social  reformers 
are  realized.  No  one  has  a  patent  on  nature 
and  hence,  no^  proprietary  rights  in  economic 
fundamentals.  Nothing  but  equalized  oppor- 
tunities and  socialized  urgencies  will  remove 
the  beak  of  capitalism  from  the  breast  of 
Labor,  and  the  stigma  of  shame  and  reproach 
from  our  economic  teachings. 

Gowned  and  mortar-hatted  in  the  vestments 
of  academic  learning  and  authority,  error  has 
prevailed  where  naked  truth  has  perished.  The 
time  of  change  has  come.  The  hope  of  humanity 
lies  in  its  advanced  economic  thinking — in  its 
unlabeled  and  unorthodox  intelligence — in  the 
insurgency  of  economic  students  and  leaders  of 
thought.  It  is  for  them,  not  only  to  revise  our 
theories  and  rewrite  our  treatises,  but  to  bear 
the  torch  of  social  reform  and  lead  the  way  to 
a  peaceable  readjustment  of  our  conditions. 

Meanwhile,  before  any  break  with  present 
conditions  is  possible,  the  divided  forces  of  re- 
form must  unite  upon  a  common  platform — not 


96  Social  Wrongs  and  State  Responsibilities 

a  platform  of  political  opinion  but  a  platform  of 
political  science.  There  is  but  one  truth,  and 
science  is  its  interpretation.  Opinions  are  con- 
tentious and  belligerent.  Science  is  at  peace. 
There  can  be  no  reconciliation  between  rival 
factions  until  their  programs  are  fused  in  the 
crucible  of  science  and  the  slag  of  error  is  sep- 
arated from  the  metal  of  truth ;  and  there  can 
be  no  permanency  in  social  reform  unless  that 
reform  is  based  in  applied  economics. 

The  principles  upon  which  all  reform  parties 
may  be  united  have  been  indicated  in  these 
pages.  At  the  base  of  human  justice  is  "equality 
of  opportunity,"  and  such  equality  is  incompat- 
ible with  Private  Finance.  "Labor"  is  at  a  dis- 
count because  "capital"  is  at  a  premium.  Until 
capitalism  is  destroyed,  the  routine  producer 
remains  an  industrial  vassal,  and  the  so-called 
"dignity  of  Labor"  a  standing  satire  on  com- 
placent servitude. 


Food  Want  425 


Comfort  Want  225 


Shelter  Want  153 


Clothing  Want  142 


Light  \    11    /  Want 
Gold  T2T  Want 


PLATE  I 


MARGINAL  VALUE  OF  GOLD 
showing  the  insolvency  of  commercial  values  in  the  metal  basis. 


DATA 

Eighteenth  Annual  Report  of  the  Commissioner  of  Labor— Income 
Expenditure  of  2567  Families  in  the  United  States  for  1901. 

Annual  Report  of  the  Director  of  the  Mint  for  1901— Consumption 
of  Gold  in  the  Arts.  (See  Appendix.) 


NOTE 


In  order  to  avoid  discrepancies  arising  from  the  progressive  de- 
valuation of  the  metal  basis  the  data  for  the  ' '  Pyramid  of  Financial 
Instability"  and  for  the  "Composite  Curve  of  Wealth"  have  been 
based  in  the  same  year  as  the  data  from  which  the  "Marginal  Value 
of  Gold"  has  been  determined. 


Physical  Values  $47,000,000,000 

(derivative  and  perishable), 

$7,651,000,000  of  which 

constitute  the  values  of 

Commerce. 


Land  Values  $47,000,000,000 

(fundamental  and  imperishable), 

normally  five  or  six  times 

greater  than  the  values  of 

Commerce. 


National  Assets  for  1901 
$94,000,000,000 


The  National  insolvency  of  Vrsnrt=TJ=rirz=^  values  mobilized  into  a  cur- 

rency of  '  'money  debts  '  '  called  V    '  '  Credits  "     V  or  "  purchasing  power,  '  '  amount- 

ing to  about  V==£=£==r=r^   $7,651,000,000 

and  resting  upon  Bank  Reserves  ^^^^^^  amounting  to  about  $808,000,000. 
Private  Reserves.V-=-=g^etc.  $1,292,000,000 


Marginal  Value  of  Gold  $18,500,000 
cumulatively  expanded  into  a  circulation  of  $2,100,000,000. 


PLATE  II 


PYRAMID  OF  FINANCIAL  INSTABILITY 
The  Monetary  Situation  in  the  United  States  for  the  year  1901. 


The  tax  on  land  has  socialized  about  twenty  per  cent  of  its  rent 
' 'income"  and  thus  reduced  its  market  value  one-fifth.  Adding  this 
fifth  to  land  valuations  and  allowing  for  the  value  of  public  lands, 
and  for  the  franchise  values  of  railway  and  other  rights  of  way,  an 
analysis  of  the  Twelfth  Census  will  show  that  the  physical  assets  (in- 
flations of  the  money-base  deducted) ,  were  about  equal  in  value  to 
the  land  assets  of  the  Nation  in  1900,  each  amounting  to  about  $47,- 
000,000,000.  (See  Appendix.)  With  the  land  assets  mobilized  into  a 
currency  of  self -liquidation,  all  derivative  and  perishable  values  may 
be  rendered  "money-solvent"  in  fundamental  and  imperishable  ones, 
commercial  values  supersolvent,  and  the  money  function  competi- 
tive and  costless. 


$100,000  Level 


PLATE  III 


COMPOSITE  CURVE  OF  WEALTH 


The  average  wealth  per  family  is  based  in  the  Twelfth 
Census,  and  its  distribution  in  the  determinations  of  G. 
K.  Holmes,  Political  Science  Quarterly,  December  1893 ; 
Charles  G.  Spahr,  ' '  The  Present  Distribution  of  Wealth ; ' ' 
and  "The  New  York  Herald"  of  April  28,  1901.  (See 
Appendix.)  '  '** 

Number  of  families  16,187,715.  Average  wealth  per 
family  of  4.7  persons  $5,500.  The  line  of  average  wealth 
A-B,  divides  "  Capitalized'  from  "Capitalized." 

Assuming  that  two  per  cent  of  the  people  are  on  or 
near  the  line  of  average  wealth,  then  about  five  per 
cent  are  fairly  above  the  line  and  about  ninety-three 
per  cent  definitely  below  it.  Those  above  the  line  are 
parasites  upon  those  below  the  line. 

The  distributive  share  at  the  extreme  end  of  economic 
dispossession  dwindles  to  nothing  while  at  the  other  end 
the  ultra-parasitic  millions  shoot  up  into  space  some 
nine  thousand  times  the  limits  of  this  page.  This  streak 
of  irresponsible  wealth  is  the  feudalizing  force  of  the 
world. 


$10,000  Level 


Line  of  Average  Wealth 


20 


40 


100 


Population  in  ten-per-cent  subdivisions 


The  First  Estate  } 

The  Second  Estate   ,  , , 

Pnvate  Owners  of 

f ^         t    Economic  Fundamentals 

The  Third  Estate  !> y 


The  Neutral  Zone  of  ^H  ^k  Fiiwntwl  Vampirism 


The  Renters  of 

Economic  Fundamentals 

upon  whom  all  rents,  taxes,  and 

interest  rates  ultimately  fall ; 

Fourth     /  \    Estate 

^  The  Host 

who  pays  for  all  the  bonded  and 

mortgaged  insolvencies  of  Private  Capitalism, 

and  out  of  whose  financially-seized  powers 

all  idle  incomes  flow ; 


The  Routine  Producer 

irhose  economic  interests  have  been  entirely  overlooked 
by  our  text-books  on  Political  Science. 


PLATE  IV 


THE  PYRAMID  OF  SOCIAL  PARASITISM 
(Based  in  the  Composite  Curve  of  Wealth) 


The  First  and  Second  Estates  comprise  about  one  per  cent  of  the  com- 
munity and  own  between  them  more  than  one-half  of  the  country's 
material  resources.  The  First  Estate— the  high  distillate  of  Private 
Finance,  whose  parasitic  fortunes  rise  beyond  the  scope  of  the  Wealth 
Curve— owns  about  one- third  of  the  aggregate  property  assets  of  the 
nation,  and  controls  the  rest  by  its  financial  absolutism.  It  domi- 
nates all  avenues  of  production  and  leisurely  takes  its  toll  out  of  the 
dispropertied  ninety-three  per  cent,  who  are  utterly  helpless  to  re- 
sist the  financial  seizure.  It  feudalizes  the  people  by  its  irresponsible 
power,  and  degrades  them  by  its  '  'benevolence. ' '  It  builds  churches, 
libraries  and  universities,  retires  super-annuated  scholarship  on  a 
pension,  and— strange  irony  of  fate— endows  chairs  of  Political  Sci- 
ence out  of  the  proceeds  of  the  economic  sin  ! 


PLATE  V-THE  FINANCIAL  FEVER  CHART 

Traced  from  the  average  fluctuations  of  sixty  active  railway  stocks. 
(Dun's  Review  for  January  6,  1912.) 


The  recurrent  high  and  low  levels  are  not  due  to  recurrent  periods 
of  successful  and  unsuccessful  management  of  railway  properties, 
nor  to  periodic  gains  or  losses  in  railway  assets,  but  to  the  discounts 
of  a  fluctuating  scarcity  of  money  means — that  is,  to  recurrent  periods 
of  distrust  in  the  general  solvency  of  values.  Apart  from  the  manip- 
ulation of  the  market  by  dishonest  speculators  and  the  influences  of 
subsidized  privilege,  the  average  fluctuations  are  not  the  fluctuations 
of  stock  values  but  of  money  values.  Under  supersolvent  conditions 
where  the  money  line  remains  permanently  straight,  there  can  be  no 
concerted  movement  of  values  and  the  average  price  level  will  find 
its  expression  in  a  straight  line. 

In  this  chart  of  panic  finance  are  reflected  not  alone  the  chronic 
insolvency  of  values,  but  the  depreciation  of  the  money  base,  the  risks 
of  tariff  legislation  and  other  interior  and  exterior  influences. 

The  high  crests  of  spasmodic  " prosperity"  mark  the  critical  points 
where  the  scope  of  business  trenches  upon  the  scope  of  credit  by 
encroaching  upon  its  cash  guarantees,  the  periods  of  acute  money 
distress  being  punctuated  by  panics.  As  the  money  function  is  a 
collective  function  and  supersolvency  a  State  responsibility,  govern- 
ments must  be  held  to  blame  for  the  periodic  disasters  of  private 
finance. 


COMPOUND  INTEREST 


At  five  per  cent  compound  interest,  "Capital"  doubles 
itself  every  fourteen  years,  its  power  to  absorb  the 
common  earnings  increasing  in  a  geometric  ratio  with 
every  cyclic  interval  of  fourteen  years.  In  less  than 
forty  cyclic  intervals  the  cumulative  interest  on  one 
dollar  will  overtake  the  present  estimated  "wealth"  of 
the  world.  In  the  curve  of  interest  herewith,  the  limits 
of  the  page  are  reached  in  nine  cycles  of  time,  the  pro- 
gressive power  of  the  interest  rate  to  consume  product 
being  given  in  figures. 

As  gold  has  been  depreciating  about  two  per  cent 
yearly  for  the  last  forty  years  or  so,  the  average  wage- 
earner's  inco^ne  #f  $«768  per  family,  in  1900,  should  now 
be  worth  $950.  Estimating  the  average  income  at  $800 
only,  and  the  number  of  families  at  twenty  millions,  the 
aggregate  annual  earnings  of  Labor  should  foot  up 
about  sixteen  billions  of  dollars.  Out  of  this  total,  the 
propertied  classes  collect  from  the  unpropertied  without 
a  reciprocal  equivalent,  between  four  and  five  billions 
of  dollars  yearly. 

It  is  this  unjustifiable  tribute  from  usurped  funda- 
mentals, which  creates  such  amazing  disparities  in  the 
livings  of  men,  and  raises  up  industrial  and  commercial 
dominions  subversive  of  free  institutions,  and  wholly 
incompatible  with  the  ideals  and  principles  of  a  demo- 
cratic commonwealth. 


THE  CURVE  OF  COMPOUND  INTEREST 

AT  FIVE  PER  CENT 

PLATE  VI 


Cumulative  Capitalism 


8        16        32       64       128     256      512 
I          I          I          I          I          I          I 
Progressive  voracity  in  nine  cycles 


APPENDIX 


THE  MARGINAL  VALUE  OF  GOLD 


THE  average  per  capita  money  outlay  for  any 
item  of  expenditure,  represents  its  average  mar- 
ginal value^  in  relation  to  other  average  per 
capita  outlays.  The  marginal  value  of  a  thing 
represents  its  intrinsic  importance  in  relation 
to  other  things. 

In  the  Eighteenth  Annual  Report  of  the  Com- 
missioner of  Labor,  there  are  given  statistical 
tables  showing  the  average  expense  for  rent, 
fuel,  lighting,  food,  clothing,  and  sundries,  for 
some  25,000  workingmen's  families  residing  in 
different  parts  of  the  country.  In  the  case  of 
2,567  of  these  families,  greater  detail  and  more 
careful  elaboration  of  items  has  made  the  tables 
not  only  more  available  for  our  purpose,  but 
more  trustworthy. 

Arranged  to  run  in  an  orderly  rotation  of 
relative  cost,  the  items  are  as  follows : 

Income  Expenditure  of  2,567  Families  in 
the  United  States  for  1901 

Number  of  families 2,567 

Average  size  of  family 5.31 

Total  income  per  family $827.19 

Total  expenditure   $768.54 


100 


Appendix 


Items  of  Expense 

Amount 

Per  Cent 

Food    

$326  90 

42.54 

Rent    

117  41 

15.28 

Clothing   

10784 

14.04 

Sundries 

45  13 

5  87 

Fuel  

32.23 

4.19 

Furniture  and  Utensils 

26  31 

3  42 

Insurance 

2097 

2  73 

Medical  and  Mortuary 

20  54 

2  67 

Intoxicating  Liquors 

1244 

1  62 

Amusements 

1228 

1  60 

Tobacco                .        

10.93 

142 

Membership  Fees     

9.05 

1.17 

Books  and  Magazines.  .  .  . 

8.35 

1.09 

Lighting       

8.15 

1.06 

Religion    

7.62 

.99 

Charity  

2.39 

.31 

Total   . 

$768.54 

100.00 

The  table  shows  what  value  an  average  work- 
man places  upon  his  various  economic  needs, 
and  how  much  of  his  income  he  is  willing  to 
expend  upon  each  individual  item.  The  per- 
centage column  may  be  said  to  represent  the 
strength  of  his  various  wants,  and,  economically 
speaking,  to  measure  the  ultimate  or  marginal 
values  of  the  various  utilities  indicated.  Food 
has  the  first  claim  on  income,  and  hence  takes 
the  largest  share  of  a  worker's  wages.  Man 
must  eat ;  he  must  be  sheltered,  and  he  must  be 
clothed.  Hence  these  wants  take  precedence  of 
all  others  where  income  is  limited.  It  will  be 
noticed  that  there  is  a  difference  between 
income  and  expenditure  in  this  statement, 


The  Marginal  Value  of  Gold  101 

amounting  to  $58.65,  which  appears  as  a  saving 
or  surplus.  When,  however,  the  average  stand- 
ard of  living  reaches  its  highest  development, 
the  reserves  of  competence  will  remain  prac- 
tically constant  and  there  will  be  on  the  average 
no  saving.  Consumption  will  keep  even  pace 
with  production,  and  income  and  expenditure 
will  balance  one  another  at  all  times.  For  this 
reason,  and  in  the  absence  of  accurate  income 
statistics,  it  may  be  expedient  to  regard  $768.54 
as  the  average  yearly  income  and  yearly  dis- 
bursement of  an  average  workingman's  family 
in  the  United  States. 

Now  under  the  head  of  "Sundries"  there  is 
comprised  a  multitude  of  more  or  less  dispen- 
sable utilities  which  the  compilers  did  not  think 
worth  while  to  specify.  The  vanity  of  display  is 
still  strong  in  human  nature,  and  among  other 
personal  adornments,  there  is  felt  a  need  for 
gold  ornaments,  dental  fillings,  trinkets,  etc. 
What  is  the  strength  of  such  a  need?  Fortu- 
nately there  is  no  trouble  in  arriving  at  an  accu- 
rate estimate  of  the  per  capita  "gold  want." 

In  1901,  when  these  data  were  collected,  the 
United  States  consumed  in  the  arts,  according  to 
the  annual  report  of  the  Director  of  the  Mint, 
$18,482,330  worth  of  new  gold.  The  population 
of  that  year  is  estimated  at  77,754,000  persons. 
This  would  mean  a  per  capita  expenditure  of 
less  than  24  cents  for  gold,  which  for  a  family 
of  5.31  members,  amounts  to  about  $1.25.  That 
is,  out  of  a  total  yearly  income  of  $768.54,  an 


102 


Appendix 


average  family  would  expend  $1.25,  or  less  than 
one-fifth  of  one  per  cent,  to  satisfy  its  gold 
appetite.  This  expenditure  measures  the  mar- 
ginal value  of  gold  as  compared  with  the  mar- 
ginal values  of  all  other  items  of  economic  con- 
sumption in  the  table.  Deducting  this  amount 
from  the  "Sundries"  account  and  placing  it  in 
its  proper  order  on  the  chart  of  marginal 
values,  we  should  have : 


Items 

Amount 
Expended 

Per  Cent 

Food   

$326.90 

42  54 

Rent    

117.41 

1528 

Clothing   

107.84 

14  04 

43.88 

5  67 

Fuel  

3223 

4  19 

Furniture  End  Utensils  

2631 

Q  42 

Insurance            .               

2097 

2  73 

Medical  and  Mortuary  

20  54 

2  fi7 

Intoxicating  Liquors 

12  44 

1  R9 

Amusements    

12  28 

Ififl 

Tobacco  

10  93 

1  A.9 

Membership  Fees  

9  05 

1  17 

Books  and  Magazines           .  .  . 

Q  QC 

1AQ 

Lighting                                 .  .  . 

8  IK 

,\)y 

Iftfi 

Religion   

7  62 

.uo 
99 

Charity  

239 

31 

Gold  

1  25 

20 

Total   

$768  54 

100  00 

According  to  this  showing,  less  than  one- 
fifth  of  one  per  cent  represents  the  "gold 
thirst,"  or  marginal  value  of  gold,  on  the  aver- 
age wage-earners'  budget.  The  utility  that  gold 
satisfies  measures  up  less  than  one  five-hun- 


The  Marginal  Value  of  Gold 


103 


dredth  of  the  total  utility  of  the  aggregate  ex- 
penditure. 

In  order  to  simplify  our  conception  of  the 
marginal  values  of  the  items  in  this  budget,  it 
will  be  expedient  to  place  all  the  absolutely  dis- 
pensable expenditures  in  the  "Sundries"  ac- 
count. The  "Sundries"  account  may  be  classed 
as  "Comforts"  and  the  "Rent"  item  as  "Shel- 
ter." Thus  changed  and  rearranged,  the  items 
will  appear  thus : 


Wants' 

Expendi- 
tures 

Per  Cent 

Strength  of 
Wants  in 
Thousandths 

Food    

$326  90 

42  54 

425 

Comforts 

174  76 

22  57 

225 

Shelter 

117.41 

1528 

153 

Clothing     . 

107  84 

14  16 

142 

Fuel  . 

32.23 

4  19 

42 

Lighting    

8.15 

1.06 

11 

Gold 

125 

20 

2 

Total  . 

$768.54 

100.00 

1.000 

Reducing  these  figures  to  a  geometrical  chart, 
the  plate  shows  diagrammatically,  not  only  the 
relative  importance  of  the  various  items  of  con- 
sumption, but  also  the  volume  or  amplitude  of 
their  respective  values.  That  is  to  say,  the  in- 
trinsic value  of  "Food"  on  this  particular 
budget,  is  more  than  212  times  that  of  gold; 
"Comforts"  more  than  112  times;  "Shelter" 
more  than  76  times;  "Clothing"  71  times; 
"Fuel"  21  times;  "Lighting"  more  than  5  times, 
and  the  aggregate  items  more  than  500  times. 


THE  DEPRECIATION  OF  GOLD 


ALTHOUGH  Adam  Smith  seems  to  have  real- 
ized that  productive  sacrifice  was  "the  only 
standard  by  which  we  could  compare  the  values 
of  different  commodities  at  all  times  and  all 
places,"  neither  he  nor  his  successors  adopted 
the  wages  unit  as  a  basis  for  estimating  the 
depreciation  of  the  metal  basis.  Yet,  while  all 
values  have  slowly  shifted  and  changed  by  im- 
proved methods  of  production,  the  costs  of 
these  values  in  units  of  sacrifice  have  remained 
the  same. 

Were  trustworthy  wages  statistics  available 
for  the  last  two  or  three  centuries,  the  average 
rates  paid  would  accurately  show  all  fluctua- 
tions in  the  values  of  the  money  metals.  We 
have  no  such  data. 

Buried  in  the  literature  of  the  past  there  are 
doubtless  scattered  the  records  of  wage-rates, 
which,  if  collected  and  classified,  would  give  us 
a  starting-point  for  future  comparisons.  But 
the  perplexities  that  confront  the  student  of 
'wages  statistics,  and  the  risks  of  a  wrong  inter- 
pretation of  rates,  are  so  great,  that  only  those 
who  have  tried  it  can  realize  the  scope  of  the 

104 


The  Depreciation  of  Gold  105 

undertaking.  Furthermore,  wage-rates  differ  in 
every  country;  and  comparisons,  to  be  reliable, 
must  be  wholly  local.  These  differences  in  wage- 
rates  are  due  to  variations  in  the  industrial 
pace,  variations  in  the  natural  and  artificial  fa- 
cilities and  resources  F,  and  variations  in  popu- 
lation pressure  on  such  resources.  Fortunately, 
a  few  reliable  wages  data  and  approximate 
results  will  answer  the  purposes  of  this  quest. 
Thorold  Rogers,  in  his  "Six  Centuries  of 
Work  and  Wages,"  gives  the  yearly  income  of 
the  English  hind,  or  farm  hand,  in  the  thir- 
teenth and  fourteenth  centuries,  at  about 
thirty-five  shillings  and  eight  pence.  The  money 
standard  of  that  time  was  based  in  the  "Tower" 
pound,  which  contained  three  times  as  much 
silver  as  the  present  English  standard.  Hence, 
reduced  to  current  English  money,  this  income 
would  amount  to  107  shillings,  or  about  $25.68 
in  American  money.  According  to  the  "Report 
on  Wages,  Earnings,  and  Conditions  of  Employ- 
ment of  Agricultural  Laborers  in  the  United 
Kingdom,"  published  in  1905,  and  quoted  in 
Bulletin  No.  71,  Bureau  of  Labor,  the  wages  of 
agricultural  laborers  averaged  on  sixty-nine 
farms  in  1903,  $3.55  per  week,  or  $184.60  per 
year,  exclusive  of  compensation  for  piece  work, 
harvest  work,  overtime,  etc.  This  income  shows 
an  apparent  increase  in  wages  of  about  six  hun- 
dred per  cent  since  the  thirteenth  century,  and 
indicates  that  gold  production  has  been  cheap- 
ened seven-fold. 


106  Appendix 

At  the  building  of  Newgate  prison  in  London, 
in  1281,  carpenters  were  getting  from  four  to 
five  and  a  half  pence  per  day,  or  an  average  of 
about  four  and  three-quarters  pence  for  skilled 
labor.  This  would  amount  to  $1.71  per  week.  In 
1905,  according  to  Bulletin  No.  77  of  the  Bureau 
of  Labor,  carpenters  and  joiners  averaged 
$10.65  per  week,  in  London.  This  would  show 
an  apparent  increase  in  wages  of  five  hundred 
and  twenty  per  cent,  and  indicates  that  gold 
production  has  been  cheapened  more  than  six- 
fold since  that  date. 

According  to  the  "Revue  d'Economique"  of 
1887,  quoted  by  Mulhall,  average  French  rural 
labor  was  paid  twelve  cents,  and  operative  labor 
eighteen  cents  per  day  in  1768,  while  in  1880, 
one  hundred  and  twelve  years  later,  the  same 
labor  was  being  paid  forty-four  cents  and  sixty- 
six  cents  respectively.  This  would  show  an  ap- 
parent increase  in  wages  of  about  two  hundred 
and  sixty-six  per  cent  and  a  cheapening  of  gold 
three  and  two-thirds  times. 

According  to  the  data  furnished  by  Ellison, 
quoted  by  the  same  authority,  the  average  wages 
paid  in  cotton-mills  in  1839,  was  four  a  half 
cents  per  hour,  and  in  1889,  nine  and  one- 
quarter  cents  per  hour,  showing  an  apparent 
increase  of  one  hundred  and  three  per  cent  in 
fifty  years,  gold  having  become  twice  as  cheap. 

From  the  census  figures  given  in  table  num- 
ber two,  Bulletin  No.  57,  Bureau  of  the  Census, 
the  per  capita  wages  in  1860  averaged  $274.00, 


The  Depreciation  of  Gold  107 

while  in  1905  they  averaged  $490.00,  showing 
an  increase  of  eighty  per  cent  in  forty-five 
years. 

From  1897  to  1907  wages  rose  nearly  thirty 
per  cent,  showing  an  average  depreciation  of 
gold  of  three  per  cent  per  year  during  that  time, 
but  from  1890  to  1907  wages  rose  but  twenty- 
eight  per  cent,  showing  an  average  depreciation 
of  gold  of  1.6  per  cent.  These  great  discrep- 
ancies are  due  to  our  cyclic  industrial  convul- 
sions, and^become  the  sources  of  grave  errors  in 
wage  comparisons. 

According  to  the  Aldrich  Report  sent  to  the 
Senate,  March,  1893,  wages  rose  89.6  per  cent 
between  1840  and  1891. 

Quoting  from  Carroll  D.  Wright's  "Industrial 
Evolution  of  the  United  States,"  carpenters 
averaged  sixty  cents,  common  labor  forty-three 
cents  and  shoemakers  seventy-three  cents  in 
1790,  while  the  same  labor  averaged  $1.40, 
$1.00,  and  $1.70  per  day  respectively  in  1860, 
showing  an  average  increase  of  about  one  hun- 
dred and  thirty  per  cent  in  seventy  years.  The 
increase  from  1860  to  1891,  according  to  the 
Aldrich  Report,  amounted  to  68.6  per  cent; 
while  from  1891  to  1907,  according  to  Bulletin 
77,  Bureau  of  Labor,  wages  rose  27.67  per  cent. 
Splicing  these  figures  together,  starting  with 
100  for  1790,  we  should  have  230  for  1860,  387 
for  1891,  and  494  for  1907,  showing  an  increase 
in  wages  of  three  hundred  and  ninety-four  per 
cent  in  one  hundred  and  seventeen  years. 


108 


Appendix 


If  in  the  same  way  we  take  the  figures  of  the 
Revue  d'Economique  as  a  starting  point  and 
splice  it  with  figures  from  the  Aldrich  Report 
and  Bulletin  77,  we  shall  have  100  for  1768,  366 
for  1880,  432  for  1891  and  551  for  1907,  show- 
ing an  approximate  increase  in  general  wages 
of  four  hundred  and  fifty-one  per  cent  in  one 
hundred  and  thirty-nine  years.  Where  wage 
rates  may  be  handled  in  the  percentage  form, 
such  a  blending  of  rates  is  permissible  and 
avoids  all  errors  due  to  the  localized  differences 
in  wage-levels. 

Gathering  up  these  fragmentary  data  into  a 
table  of  comparisons,  we  have  the  following 
record  of  wage-advances : 


Dates 

Occupations 

Time 

Apparent 
Wage 
Increase 

1300  to  1903 

Farm  Labor 

600  yrs. 

600  per  cent 

1300  to  1905 

Carpenters 

600  yrs. 

520  per  cent 

1768  to  1880 

Various 

112  yrs. 

226  per  cent 

1768  to  1891 

Various 

123  yrs. 

332  per  cent 

1768  to  1907 

Various 

139  yrs. 

451  per  cent 

1790  to  1907 

Various 

117  yrs. 

394  per  cent 

1790  to  1860 

Various 

70  yrs. 

130  per  cent 

1790  to  1891 

Various 

101  yrs. 

287  per  cent 

1839  to  1889 

Cotton  Spinning 

50  yrs. 

103  per  cent 

1840  to  1891 

Various 

51  yrs. 

88  per  cent 

1860  to  1905 

Various 

45  yrs. 

80  per  cent 

1897  to  1907 

Various 

10  yrs. 

30  per  cent 

1890  to  1907 

Various 

17  yrs. 

28  per  cent 

The  Depreciation  of  Gold  109 

From  an  analysis  of  the  table  of  comparisons, 
it  appears  that  nearly  all  of  the  decline  in  the 
cost  of  gold  production  occurred  within  the  last 
one  hundred  and  fifty  years,  and  that  prior  to 
that  time  wages  remained  practically  on  a  level. 

We  are  probably  quite  safe  in  saying  that, 
to-day,  gold  is  worth  one-sixth  of  what  it  was 
two  or  three  hundred  years  ago.  The  deprecia- 
tion within  the  past  three  decades  has  been 
very  great,  and  is  going  on  probably  at  a  rate 
of  two  per  cent  a  year.  The  gold  dollar  of  fifty 
years  ago  fs  worth  only  about  fifty  cents  to-day, 
and  in  another  fifty  years  will  be  worth  only 
twenty-five  cents  if  we  persist  in  using  the  gold 
basis. 

The  production  of  gold  acquired  a  great  im- 
pulse during  the  rise  of  the  factory  system  in 
the  early  part  of  the  nineteenth  century,  when 
"capital"  was  in  great  demand  for  steam-power 
installations  in  all  kinds  of  industrial  produc- 
tion. 

Watt's  steam  engine  was  invented  in  1769, 
Arkwright's  loom  in  1785,  Whitney's  cotton  gin 
in  1793;  these,  and  other  historic  inventions, 
were  crowding  fast  for  application  on  modern 
lines  of  machinery  production,  and  overtook  the 
usual  moderate  supply  of  "liquid  capital."  Gold 
was  scarce,  and  hence  it  at  once  responded  to 
the  demand  by  becoming  dear — by  expanding 
its  "scarcity"  value  so  as  to  meet  the  pecuniary 
demands  for  liquidating  enlarged  credits. 

Professor   Jevons,   in   his   study   of  prices, 


110  Appendix 

found  that  between  1809  and  1849  (when  the 
factory  movement  was  at  its  height),  gold 
values  rose  one  hundred  and  forty-five  per  cent. 
By  1859  they  fell  twenty  per  cent  below  normal. 
The  discovery  of  gold  in  California,  improved 
methods  of  banking,  improved  facilities  of 
transportation,  and  the  inflow  of  gold  from  less 
enterprising  countries,  not  only  restored  the 
former  level  but  overtook  it.  Meanwhile,  still 
richer  sources  of  gold  supply  were  found,  and 
new  and  improved  methods  of  production  were 
at  work  cheapening  the  output.  The  cyanide 
process  and  the  gold  dredge  are  responsible  for 
much  of  the  cheapening. 


LAND  VALUES 

SPEAKING  commercially,  the  land  holdings  of 
the  Choctaw  and  Chickasaw  Indians  are  prob- 
ably wortn  ten  times  as  much  to-day  as  the 
whole  territorial  United  States  was  worth  three 
centuries  ago. 

In  colonial  days,  land  could  be  had  from  two 
and  a  half  to  ten  cents  an  acre.  In  1778,  North 
Carolina  offered  settlers  a  square  mile  of  land 
for  sixty-four  dollars,  or  at  the  rate  of  ten  cents 
an  acre.  In  1779,  Kentucky  offered  pioneers 
four  hundred  acre  sections  for  ten  dollars,  or 
at  the  rate  of  two  and  a  half  cents  per  acre.  So 
great  was  the  bid  for  settlers  that  virgin  land 
could  be  had  for  the  bare  cost  of  recording  a 
title.  Since  then,  all  arable  soils  have  been  taken 
up  and  nothing  is  left  but  undesirable  land. 
This  remnant  is  held  at  a  flat  rate  of  $1.25  per 
acre.  An  acre  of  land  in  the  heart  of  the  city  of 
New  York  is  worth  to-day  more  than  ten  million 
times  that  value.  Land  in  the  vicinity  of  Wall 
Street  is  assessed  as  high  as  $300.00  a  square 
foot,  though  an  office  building  twenty-five 
stories  high  rarely  cost  more  per  square  foot  of 

111 


112  Appendix 

lot  area  than  $200.00.  A  small  plot  of  land  on 
Broadway  and  34th  Street  valued  at  $10,000  in 
1855,  brought  $375,000  or  $350.00  a  square  foot 
in  1901.  Near  the  Bank  of  England,  land  is 
worth  about  $16,000,000  an  acre,  while  in  the 
heart  of  the  financial  district  in  New  York  land 
averages  about  $20,000,000  an  acre.  A  few 
years  ago  lot  No.  1,  thirty-nine  feet  on  Wall 
Street  and  thirty  feet  on  Broad  Street,  sold  for 
$700,000,  or  at  the  rate  of  about  $26,000,000 
per  acre. 

According  to  the  "Report  of  the  Commis- 
sioners of  Taxes  and  Assessments"  of  the  City 
of  New  York,  for  the  quarter  ending  June  30, 
1907,  the  assessed  value  of  the  land  in  New 
York  City  amounted  to  $3,563,293,224,  while 
the  improvement  values  amounted  to  $2,140,- 
716,428,  the  rate  of  land  to  improvements  being 
62.5  to  37.5  per  cent  respectively.  In  the  Bor- 
ough of  Manhattan,  land  values  are  67.2  per 
cent  of  the  total  values,  while  in  the  first  sec- 
tion of  Manhattan,  land  is  70  per  cent  of  the 
total,  or  two  and  a  third  times  as  valuable  as 
the  physical  improvements  upon  it.  The 
assessed  value  of  land  in  New  York  City  is 
nearly  twice  as  great  as  the  value  of  land  in  the 
balance  of  the  State.  Six  square  miles  of  land 
in  the  neighborhood  of  Central  Park  are  more 
valuable  than  the  assessed  value  of  all  the  real 
estate  in  the  State  of  Missouri.  Wherever  the 
commercial,  industrial,  and  social  interests  are 
condensed,  there  the  land  values  easily  overtake 


Land  Values  113 

the  improvement  values.  Indeed,  a  little  reflec- 
tion will  show  that  land  values  are  independent 
of  the  cost  of  the  improvements,  but  are  de- 
pendent upon  the  co-operative  efficiencies  that 
are  attained,  and  the  pressure  of  population  up- 
on these  efficiencies.  Cut  down  your  population 
and  values  fall.  Cut  down  your  efficiencies  and 
rents  decline. 

By  that  reciprocity  of  interests  which  binds 
all  communities  together,  it  may  be  said,  that 
land  valuesJn  cities,  depend  not  alone  on  their 
own  urban  populations,  but  on  those  of  the 
country  of  which  they  are  the  civic  components 
and  commercial  centers.  Rural  land  values 
rise  in  sympathy  not  only  with  rural  improve- 
ments, but  with  urban  improvements,  and  thus 
tend,  on  the  average,  to  overtake  local  physical 
values  faster  than  cities. 

In  the  assessed  valuations  given  no  al- 
lowance is  made  for  streets,  parks,  water 
areas  and  other  tax-exempt  properties,  and 
where  public  park  areas  and  waters  are  ex- 
tensive, and  their  values  have  not  been  included 
in  the  tax  appraisements,  the  real  land  values 
are  much  greater  than  would  appear.  Thus, 
the  average  assessed  land  values  in  New  York 
City  are  62.5  per  cent  of  the  total.  But  of  the 
$1,156,346,803  exempt  values,  about  seventy- 
five  per  cent  are  chargeable  to  land  and  were 
they  included  in  the  estimate,  the  land  ratio 
would  be  64.8  per  cent.  Furthermore,  the 
special  franchise  values  in  the  city  amount  to 


114  Appendix 

$466,855,000,  while  the  physical  values  of  these 
properties  amount  to  only  $69,615,950,  being 
thirteen  per  cent  of  the  total  valuation.  Were 
these  added,  the  ratio  would  rise  to  66.4  per 
cent. 

The  following  ratios  of  land  valuations  to 
total  valuations  culled  from  the  New  York  City 
Report  of  Taxes  and  Assessments  for  1907  may 
be  of  interest : 

Average  land  values  first  section  of  Manhattan . .  70.0% 
Average  land  values  for  Borough  of  Manhattan.  .67.2% 

Average  land  values  for  City  of  New  York 62.5% 

Average  land  values  for  Boston 60.7% 

Average  land  values  for  Milwaukee 55.5% 

Average  land  values  for  Detroit 53.9% 

Average  land  values  for  St.  Louis 51.2% 

Average  land  values  for  Baltimore 44.0% 

As  stated,  no  allowance  has  been  made  in 
these  estimates  for  public  properties. 

The  Twelfth  Census  places  the  value  of  farm 
lands  and  factory  lands  at  $14,085,427,275,  and 
the  value  of  buildings  and  structures  on  these 
lands  at  $5,006,043,275.  This  would  make  the 
ratio  of  land  values  to  improvement  values, 
seventy-three  per  cent.  Were  due  allowance 
made  for  exempt  park  and  other  public  proper- 
ties, the  general  value  of  land  in  cities  would 
probably  reach  sixty  per  cent. 

The  Twelfth  Census  gives  us  the  following 
estimates  of  the  "wealth"  of  the  United  States 
for  1900: 


Land  Values  115 

1.  Real  property  and  improvements 

taxed   $46,324,839,234 

2.  Real  property  and  improvements 

exempt   6,212,788.930 

3.  Railroads  and  their  equipment 9,035,732,000 

4.  Street  railways 1,576,197,160 

5.  Telegraph  systems 211,650,000 

6.  Telephone  systems 400,324,000 

7.  Pullman  and  private  cars 98,836,600 

8.  Shipping  and  canals 537,849,478 

9.  Waterworks,  private 267,752,468 

10.  Electric  light  and  power,  private. . .  402,618,653 

11.  Live  sto,ck  3,306,473,278 

12.  Farm  improvements  and  machinery  749,775,970 

13.  Manufacturing  machinery,  tools  and 

implements 2,541,046,639 

14.  Gold  and  silver  and  bullion 1,677,379,825 

15.  Agricultural  products 1,455,069,323 

16.  Manufactured  products 6,087,151,108 

17.  Imported  merchandise 424,970,592 

18.  Mining  products 326,851,517 

19.  Clothing  and  personal  adornments. .  2,000,000,000 

20.  Furniture,  carriages,  etc 4,880,000,000 


Total $88,517,306,775 

Items  1  and  2  give  the  appraised  values  of  all 
the  taxed  and  exempt  land  improvements.  The 
values  foot  up  a  total  of  $52,537,628,164.  To 
get  at  the  net  land  values,  the  improvement 
values  must  be  deducted  from  this  total.  As 
already  mentioned  the  farm  and  factory  values 
are  rated  at  $14,085,427,275  and  the  value  of 
the  buildings  on  same  at  $5,006,043,278,  making 
a  total  of  $19,091,470,553  in  farm  realty.  De- 
ducting this  from  the  total  realty  values  there  is 
left  $33,446,157,611  chargeable  to  city  realty. 


116  Appendix 

We  have  estimated  that  the  average  value  of 
land  in  cities  would  reach  60  per  cent  of  the 
total  value,  but  in  order  to  be  on  the  safe  side  we 
will  place  the  average  at,  say,  52.5  per  cent.  If 
this  estimate  be  approximately  correct,  then 
about  $17,550,000,000  of  this  amount  will  repre- 
sent land  values  and  $15,896,157,611  improve- 
ment values.  Adding  these  items  separately  to 
the  respective  farm  and  factory  valuations,  we 
get  $31,635,427,275  for  total  land  values,  and 
$20,902,200,889  for  total  improvement  values. 
From  these  figures  it  would  appear  that  the 
general  average  of  land  values  is  about  sixty 
per  cent  of  the  total  realty  values.  In  these 
estimates,  however,  no  allowance  has  been  made 
for  the  franchise  values  of  the  efficiencies  of 
transportation  and  communication,  and  of  the 
light,  power  and  water  supply  installations  of 
private  ownership,  which  appear  itemized  in  the 
"wealth"  statement  Nos.  3  to  10  inclusive. 
These  items  foot  up  $12,530,960,359.  Judging 
from  the  New  York  City  estimates,  already 
quoted,  where  franchise  values  were  more  than 
six  times  as  great  as  the  physical  values,  we  are 
probably  safe  in  estimating  at  least  sixty  per 
cent,  or  about  $7,500,000,000  of  this  total,  to 
consist  of  franchise  values  chargeable  to  land, 
the  balance,  $5,030,960,359,  representing  the 
physical  values  of  these  efficiencies.  Adding 
this  to  $31,635,427,275  we  get  $39,135,427,275 
as  a  revised  total  of  land  valuation  which  would 
appear  to  make  the  land  ratio  about  sixty-five 


Land  Values  117 

per  cent.  But  before  we  can  get  the  actual  land 
value,  one  more  revision  will  be  necessary. 
States  and  municipalities  collect  a  land  tax.  It 
is  a  well-known  principle  in  economics  that,  of 
all  taxes,  the  land  tax  alone  cannot  be  shifted 
upon  the  tenant.  The  heavier  the  tax,  the 
smaller  the  rent  income,  and  the  cheaper  the 
land,  until,  finally,  when  the  tax  rate  is  so  great 
that  it  absorbs  the  whole  rent  value,  land  be- 
comes worthless  as  an  investment  and  may  be 
had  for  the  tax  rate,  which  becomes  the  rent 
rate.  Now  the  state,  county,  and  city  govern- 
ments, exercising  the  right  of  eminent  domain, 
collect  a  part  of  the  rent  of  land  in  the  form  of 
a  tax.  This  tax  diminishes  the  value  of  the  land 
to  the  extent  that  it  diminishes  the  rent  value. 
How  much  has  the  value  of  land  been  impaired 
by  this  tax?  The  revenues  collected  by  these 
local  controls  amounted  to  about  $706,660,244 
in  1902.  The  ratio  of  real  estate  to  personal 
property  amounted  to  about  seventy-eight  per 
cent  according  to  the  assessed  valuation  of  each, 
and  hence  the  revenue  from  realty  may  be 
figured  at  about  $551,000,000.  We  found  the 
apparent  ratio  of  land  to  improvements  to  be 
about  sixty  per  cent,  and  hence,  about  $330,- 
600,000  of  this  amount  is  chargeable  to  land. 
The  people,  in  the  person  of  their  government, 
collect  in  this  $330,600,000  a  part  of  the  rent  of 
the  common  environment,  the  balance  being 
collected  by  private  owners.  Were  there  no  land 
tax,  this  amount  would  swell  the  receipts  of 


118  Appendix 

private  ownership,  and  land  would  at  once  rise 
over  twenty  per  cent  in  value.  As  it  is,  a  part 
of  the  rent  income  has  been  socialized  by  the  tax 
rate  and  land  is  bought  and  sold  in  the  market 
at  its  residual  value.  The  land  investor  pays 
less  for  land.  That  is  why  the  tax  cannot  be 
shifted.  Were  the  tax  suddenly  raised,  however, 
the  competitive  value  of  land  would  fall.  The 
landowner  could  not  collect  as  much  rent  as 
before,  and  he  could  not  make  good  the  loss. 
Such  an  arbitrary  public  policy  would  constitute 
a  confiscation  of  private  property,  and  com- 
pound the  economic  felony.  Landlordism  is  only 
an  optional  capitalism.  "Capital"  has  the  alter- 
native of  seeking  other  forms  of  idle  income, 
and  hence,  landowners  cannot  bo.  singled  out  for 
social  reprobation  and  punishment  because  of 
fundamental  wrongs  for  which  economic 
empiricism  alone  is  responsible. 

"Capitalizing"  this  annuity  of  $330,600,000 
at  the  current  rate  of  four  per  cent,  we  find  its 
income  value  to  be  equal  to  an  investment  of 
$8,265,000,000  in  land.  Adding  this  to  our 
revised  total  of  $39,135,427,275,  we  obtain  a 
grand  total  land  value  of  $47,400,427,275.  Eco- 
nomic obscurity,  taking  refuge  in  economic 
vagueness,  has  called  these  reflected  values  of 
industrial  co-operation,  the  "unearned  incre- 
ment." 

Rearranging  the  "wealth"  chart  for  1900,  the 
items  may  be  condensed  and  classified  as  fol- 
lows: 


Land  Values  119 

1.  Land  values $47,400,427,275 

2.  Buildings  and  structures 20,902,200,889 

3.  Transportation    and    communication 

efficiencies  and  municipal  installa- 
tions (Nos.  3  to  10  inclusive) 5,030,960,359 

4.  Manufacturing  machinery,  tools  and 

appliances,  farm  tools,  implements 

and  equipments   (Nos.  12  and  13)     3,290,822,609 

5.  Food  reserves,  in  process    (Nos.  11 

and  15)    4,761,542,601 

6.  Other  products,  in  process  (Nos.  16, 

17,  18)    6,838,973,217 

7.  Household  utilities 4,880,000,000 

8.  Clothing^  and  adornments 2,000,000,000 

9.  Money  metals  1,677,379,825 

Total $96,782,306,775 

The  capitalized  land  tax  has  increased  the 
census  total  by  $8,265,000,000. 

As  has  been  explained,  the  land  values  are 
efficiency  or  "facility"  values.  They  are  mostly 
the  reflected  values  of  the  industrial  instru- 
mentalities, Nos.  2,  3  and  4,  of  the  rearranged 
chart.  These  improvement  values  foot  up 
$29,223,983,857.  Hence,  if  these  estimates  are 
reasonably  fair,  the  approximate  ratio  of  land 
values  to  improvement  values  will  be  about  62.0 
per  cent.  The  tax  rate  on  land  depreciates  its 
market  value  about  21  per  cent,  hence  the  real 
ratios  of  land  to  improvement  values  would  be 
so  much  greater  in  cities.  The  average  land 
values  in  the  Borough  of  Manhattan  would 
amount  to  about  80  per  cent  of  the  total,  or  four 
times  the  improvement  values. 


THE  DISTRIBUTION  OF  WEALTH  UNDER 
PRIVATE  FINANCE 


ACCORDING  to  an  estimate  made  by  the  New 
York  Herald  in  its  issue  of  April  28,  1901,  3228 
millionaires,  representing  one  two-hundredth  of 
one  per  cent  of  the  population,  owned  one-fifth 
of  the  wealth  assets  of  the  United  States. 

G.  K.  Holmes  (Political  Science  Quarterly, 
December,  1893)  estimates  the  division  of  the 
national  wealth  for  1890  as  follows : 

9  per  cent  owned  71  per  cent  of  the  wealth 

.~)  '        <  <  '  '  '  '  OA        '  '  '  *  *  <  <  < 

r>q       «  •  •  "  Q"  "  *'  '  * 

Charles  G.  Spahr  (The  Present  Distribution 
of  Wealth)  estimates  that  in  1890 : 

1  per  cent  owned  51  per  cent  of  the  wealth 

-j  i      «         «  «         qr      «         «  «  « 

^^     «         <t  . .          ~|Q"         ' '  ' '  " 

,  ,      .  .         (<  «  ••       <  <         « <  <  <  << 

44  1 

This  is  more  than  two  decades  ago.    Since 
then  the  grip  on  parasitic  income  has  not  been 
relaxed.   Plotting  these  estimates  into  a  curve 
120 


The  Distribution  of  Wealth  121 

of  "prosperity"  with  the  Carnegie,  Morgan  and 
Rockefeller  millions  at  one  extreme,  and  the 
"financed"  privation  at  the  other,  we  get  a 
diagrammatic  view  of  the  economic  situation. 
According  to  census  estimates  for  1900,  the 
average  wealth  per  family  of  4.7  persons 
appears  to  be  $5,500.  Taking  this  average 
wealth  as  a  basis,  and  locating  it  on  the  chart  of 
distribution,  (Plate  III) ,  we  obtain  the  line  AB, 
from  which  the  relative  possessions  of  men  may 
be  compared.  If  this  chart  is  a  fair  approxima- 
tion to  the  truth,  it  shows  that  only  about  six 
per  cent  of  the  people  are  on  and  above  the  line 
of  average  wealth,  and  that  ninety-four  per  cent 
of  the  community  are  on  and  below  that  line.  It 
also  shows  that  only  about  one  per  cent  of  the 
people  are  on  or  above  the  ten-thousand  dollar 
level  of  possession.  The  line  AB  is  at  the  zone  of 
the  forces  of  economic  spoliation,  where  the 
parasitic  loss  and  parasitic  gain  just  about  offset 
one  another.  It  is,  therefore,  the  base  line  from 
which  the  parasitic  influences  may  be  estimated. 
A  possession  of  five  or  six  thousand  dollars  per 
family  will  imply  some  sort  of  an  investment 
yielding  "income"  to  offset  or  neutralize  the 
"outgo"  from  outside  influences.  If  invested  in 
a  home,  for  instance,  it  would  offset  the  capital- 
ism of  land  and  house  rent,  leaving  open  to 
parasitic  attack  the  running  household  expendi- 
tures, the  capitalism  of  which  has  already  been 
written  off  or  discounted  in  the  course  of  pro- 
duction and  distribution.  It  is  purely  a  case  of 


122  Appendix 

vampirism  versus  vampirism.  No  one  can 
escape  the  parasitic  influence.  Whether  a  fam- 
ily living  on  the  line  of  average  wealth  can 
offset  the  voracity  of  capitalism  from  without, 
by  the  devouring  force  of  capitalism  from 
within,  will  depend  upon  its  standard  of  living. 
If  its  standard  of  living  is  up  to  the  standard  of 
the  average  wealth,  then  the  forces  will  about 
equalize  one  another.  If  it  fall  below  that  level, 
and  such  family  can  capitalize  its  stint  into  a 
flow  of  services,  then  its  parasitic  income  will 
overtake  its  parasitic  outgo,  and  it  will  be 
launched  upon  a  career  of  parasitic  affluence. 
The  theory  of  "parsimony,"  and  "saving  capital 
from  the  jaws  of  appetite,"  has  its  rise  in  this 
counter-parasitism. 

Normally,  those  on  the  line  of  average  wealth 
come  off  about  even  in  the  industrial  process. 
They  neither  gain  nor  lose;  are  neither  the 
despoilers  nor  the  despoiled.  Those  whose  for- 
tunes rise  above  the  average  wealth  line  are 
parasites,  and  prey  upon  the  industrial  efforts 
of  those  below,  to  the  extent  of  their  holdings 
above  that  line.  That  is,  the  more  they  have, 
the  greater  their  predatory  power  and  the  more 
they  appropriate.  Those  who  fall  below  the 
average  line  of  possession  become  the  industrial 
spoil  of  those  above,  to  the  extent  that  they  fall 
below  that  average.  In  other  words,  the  less 
they  have,  the  more  they  are  despoiled,  and 
hence  the  aptness  of  the  parable  of  the  talents : 
"For  unto  every  one  that  hath  shall  be  given, 


The  Distribution  of  Wealth  123 

and  he  shall  have  abundance ;  but  from  him  that 
hath  not,  shall  be  taken  away  even  that  which 
he  hath." 


THE  INCOME  OF  PRIVATE  FINANCE  AND 

THE  OUTGO  OF  THE  UNPROPER- 

TIED  PRODUCER 


THE  census  for  1900  estimates  the  national 
wealth  at  $88,500,000,000.  Probably  two-thirds 
of  these  values,  or  $59,000,000,000,  have  their 
interest  rates  written  off  and  discounted  in  one 
way  or  another  along  the  thousand  and  one 
channels  of  production  and  distribution,  in  the 
shape  of  rent  and  interest  charges.  If  this  esti- 
mate be  reasonable,  and  we  average  up  the 
voracity  of  capital  at  five  per  cent,  the  idle 
income  would  amount  to  five  per  cent  on 
$59,000,000,000,  or  $2,950,000,000  per  year. 

The  really  paramount  object  of  census  inquiry 
should  be  the  industrial  potential  and  produc- 
tive pace  of  the  nation,  from  the  determinations 
of  which  we  might  accurately  establish  our  per 
capita  income  and  estimate  our  economic  prog- 
ress or  decline.  Unfortunately  our  census 
statistics  give  us  no  proper  clue  from  which 
such  potential  and  pace  may  be  established,  and 
we  are  left  to  grope  in  blind  conjecture  on  this, 
as  on  other  very  important  subjects.  What  is 

124 


Income  vs.  Outgo  125 

the  per  capita  product?  Is  it  equivalent,  (in 
terms  of  mining) ,  to  the  production  of  six  troy 
ounces  of  gold,  or  a  matter  of  six  hundred 
dollars  per  year  for  an  average  family  of  five 
persons?  Mr.  Mitchell  considers  six  hundred 
dollars  per  year  a  fair  minimum  income.  It  is, 
however,  doubtful  if  American  wages  averaged 
six  hundred  dollars  per  family  in  1900.  If,  in 
the  absence  of  reliable  data,  we  adopt  this  con- 
jectural average,  then  our  total  productive  out- 
put for  .1900  would  appear  to  be  about  $9,120,- 
000,000,  out  of  which  private  capitalism  claims 
$2,950,000,000,  or  over  thirty-two  per  cent  If, 
however,  we  adopt  as  the  proper  average,  our 
wage-earner's  budget  of  $768.54  per  year  for  a 
family  of  5.31  persons,  then  the  per  capita  earn- 
ings will  amount  to  $144.73,  and  the  national 
output  for  1900  will  foot  up  about  $11,000,000,- 
000.  Upon  these  earnings  the  idle  income  of 
capitalism  would  figure  nearly  twenty-seven  per 
cent.  Let  us  err  rather  on  the  side  of  con- 
servatism, and  estimate  the  parasitic  voracity 
of  capitalism  at,  say,  twenty-five  per  cent  of  the 
total  wage-earner's  income.  We  then  have  a 
devouring  force  which  perpetually  appropriates 
one-quarter  of  the  productive  energies  of  Labor, 
and  there  is  no  resisting  the  claim  under  our 
present  economic  arrangements.  The  worker  is 
thus  twenty-five  per  cent  slave,  and  seventy-five 
per  cent  freeman — a  quarter  of  his  industrial 
life  is  in  perpetual  forfeit  to  his  capitalist 
masters. 


THE  LAW  OF  MONEY  VOLUME  AND  THE 
LAW  OF  SOLVENT  FUNCTIONS 


BEFORE  a  money  of  circulation  may  be  estab- 
lished there  must  be  a  sure  means  of  fixing  the 
value  of  its  units.  The  State  must  own  and 
control  some  invaluable  right  or  privilege  upon 
which  such  a  currency  may  be  based  and  in 
which  all  its  units  may  be  redeemed  and  quit- 
claimed. 

All  values,  in  the  last  analysis,  are  based  in 
the  value  of  life  itself.  If  the  value  of  life  is 
unlimited,  and  the  right  to  the  environment  is 
indispensable  to  existence,  then  the  value  of 
the  renting  privilege  will  be  unlimited. 

Collective  ownership  of  land  and  the  power 
to  fix  the  rent  rate  gives  the  community  the 
power  to  establish  the  value  of  the  money  unit. 
The  land  privilege  as  the  most  indispensable  of 
all  privileges,  becomes  then  a  measure  by  which 
all  other  values  may  be  gauged.  Whatever  may 
happen,  the  land-based  unit  will  always  repre- 
sent a  definite  value  in  terms  of  the  renting 
privilege.  Once  the  representative  value  of  the 
money  unit  is  fixed,  whether  the  money  volume 
be  large  or  small,  each  unit  will  have  the  same 
value  in  terms  of  the  renting  privilege  and  will 
always  rent  the  same  average  area  of  ground. 

126 


The  Law  of  Money  Volume  127 

Should  the  money  volume  be  expanded  be- 
yond the  capitalized,  or  competitive  value  of 
land,  the  renting  privilege  will  tend  to  be 
cheapened  in  relation  to  the  derivative  values 
of  commerce.  Should  it  fall  short  of  the  cap- 
italized value,  the  derivative  values  of  com- 
merce will  tend  to  be  cheapened  in  relation  to 
the  renting  privilege.  To  preserve  the  parity 
between  the  fundamental  values  of  land  and 
the  derivative  values  of  commerce,  the  mar- 
ginal valup,  of  the  renting  privilege  must  be 
maintained  at  par  with  the  marginal  value  of 
the  money  unit. 

What  the  per  capita  money  volume  shall  be 
will  depend  upon  the  average  private  money 
hoards  men  accumulate  before  they  are  willing 
to  desist  from  production  and  retire  on  a  com- 
petence. The  reserves  of  competence  are  a 
gauge  of  the  average  standard  of  living  and 
this  standard  is  rapidly  rising.  In  1850  the 
average  wealth  in  the  United  States  was  esti- 
mated at  $307.69,  and  in  1900  at  $1,164.79. 
Allowing  for  the  depreciation  of  the  metal 
basis  during  that  time,  the  latter  estimate,  ap- 
praised in  the  money  par  of  1850,  would 
amount  to  about  $582.40  and  show  a  net  in- 
crease in  fifty  years  of  about  ninety  per  cent, 
or  nearly  two  per  cent  per  year. 

The  money  reserves  of  a  country  do  not  rep- 
resent a  concrete  or  achieved  wealth  in  terms 
of  the  physical  values  of  industry,  but  only  a 
potential  wealth — a  demand  for,  or  a  title  to 


128  Appendix 

productive  services.  Under  righteous  condi- 
tions such  money  reserves  represent  the  mutual 
claims  of  individuals  upon  one  another  for  re- 
ciprocal services,  and  the  "wealth  of  nations" 
consists  not  only  in  the  physical  values  of  in- 
dustry, but  in  these  mutual  claims  upon  the 
collective  powers  of  production.  What  these 
claims  may  be  worth  in  concrete  product  will 
depend  upon  the  industrial  potential  of  a  peo- 
ple. Under  private  capitalism  we  have  prac- 
tically no  money  hoards.  We  have  "property 
hoards ;"  that  is,  we  have  not  alone  the  perish- 
able and  derivative  values  of  commerce,  but  we 
carry  as  a  private  asset,  the  capitalized  values 
of  usurped  fundamentals. 

Allowing  for  the  land  values  socialized  by  the 
land  tax  (see  "Land  Values"),  the  per  capita 
wealth  for  1900  may  be  roughly  itemized  as 
follows : 

Total  land  values $624 

Buildings  and  structures $234 

Tractions  and  other  public  utilities  56 
Agricultural  tools  and  facilities ....  37 
Food  resources  and  other  products 

in  process 130 

Household  utilities  76 

Commercial    values    in    process    of 

liquidation    ("Credits") 95 

Total  physical  values $628 


Grand  total  "properties" $1252 

Total  "moneys" 27 


The  Law  of  Money  Volume  129 

We  have,  therefore,  1252  "property"  units 
and  27  "money"  units,  and  the  problem  is  to 
maintain  the  former  perpetually  solvent  in  the 
latter.  The  sustained  legal,  clerical,  commer- 
cial, industrial,  and  other  costs,  required  for 
the  perpetual  maintenance  of  a  ten-thousand- 
dollar  solvency,  entail  losses  and  'wastes  of 
financial  function  equal  to  the  labor  powers  of 
an  average  man  forever.  In  other  words,  the 
interest  on  ten  thousand  dollars  will  purchase 
the  working^owers  of  a  man  to  the  end  of 
time. 

Under  supersolvent  conditions  all  values  but 
those  of  land  and  labor  become  flat  and  income- 
less.  Land  is  imperishable.  It  has  a  present 
and  a  future  value,  and  the  renting  privilege 
may  be  extended  into  the  future  by  long  or 
short  term  tenures.  Hence  the  marginal  value 
of  the  renting  privilege  does  not  represent  the 
marginal  value  of  land.  Providing  that  the 
money  volume  be  kept  within  the  limits  of  the 
marginal  value  of  land,  the  par  redemption  of 
the  currency  in  the  renting  privilege  will 
always  be  practicable  up  to  the  full  amount  of 
the  circulation. 

It  should  be  borne  in  mind,  that  directly  or 
indirectly,  each  individual  pays  his  share  of 
rent  for  every  acre  of  land  in  use  and  under 
cultivation,  and  that  the  total  per  capita  share 
of  the  land  rent  represents  alone  about  seven- 
teen per  cent  of  the  total  expenditure  on  the 
budget  of  the  average  workingman.  The  aver- 


130  Appendix 

age  man  pays,  not  only  his  share  of  the  total 
land  rent,  but  he  likewise  pays  for  the  per- 
petual upkeep  of  all  the  buildings,  structures 
and  installations  of  commerce  and  industry  and 
their  capitalized  insolvencies.  These  costs  are 
lost  sight  of  in  the  added  price  he  pays  for 
food,  clothing,  fuel,  and  other  expenses.  The 
"Shelter"  item  given  in  the  chart  of  average 
expenditure  shows  only  about  one-half  of  the 
actual  expense. 

The  private  reserves  of  competence  are  in- 
creasing at  the  rate  of  nearly  two  per  cent  per 
year.  When  such  reserves  shall  reach  their 
highest  development,  income  and  expenditure 
will  about  offset  one  another  and  there  will  be, 
on  the  average,  no  saving. 

The  pressure  of  population  on  a  limited  re- 
source makes  land  scarce  and  rents  high.  The 
greater  the  pressure  the  higher  the  rents.  The 
money  volume  remaining  constant,  the  per 
capita  circulation  is  reduced  in  the  same  ratio 
that  the  rent  is  advanced,  and  hence  the  parity 
between  money  and  land  remains  the  same. 
But  the  renting  privilege  being  now  more 
precious,  the  marginal  importance  of  land  will 
rise  while  that  of  the  derivative  values  of  com- 
merce will  appear  to  fall  in  comparison. 

The  par  between  the  derivative  values  of 
commerce  and  the  renting  privilege  can  be  re- 
stored only  by  expanding  the  rentable  area  of 
land  so  as  to  compensate  for  the  increased 
population.  Hence  to  maintain  the  parity  be- 


The  Law  of  Money  Volume  131 

tween  the  fundamental  values  of  land  and  the 
derivative  values  of  commerce,  the  pressure  on 
the  common  resource  must  remain  a  constant. 

Not  only  is  the  par  between  money,  goods, 
and  land,  undergoing  a  continuous  readjust- 
ment, but  the  money  volume  is  self-regulating 
and  self-limiting.  Should  the  average  money 
reserves  reach  that  apparent  per  capita  afflu- 
ence where  the  incentives  to  production  would 
become  weakened  by  leisured  competence, 
wages,  rents,  and  prices,  would  rise  and  tend 
to  restore  the  parity  of  things  by  depreciating 
the  money  unit,  and  shrinking  the  values  of  the 
inflated  money  hoards.  Thus  the  limitations 
of  the  money  volume  depend  primarily  upon 
the  urgencies  of  production,  and  the  urgencies 
of  production,  in  their  turn,  upon  the  standard 
of  living  and  the  average  money  hoards  capable 
of  maintaining  that  standard. 

Recapitulating,  it  may  be  said,  that : 

The  law  of  solvent  functions  is  the  law  of  the 
supersolvency  of  commercial  values  and  that 
such  a  law  depends  upon  the  liquefaction  of 
an  asset  comprehensive  enough  to  hold  the 
values  of  commerce  supersolvent. 

The  law  of  "quantity,"  or  per  capita  volume,  is 
the  law  of  the  average  money  hoard,  and  the 
law  of  the  average  money  hoard  is  the  law 
of  average  thrift,  standard  of  living,  and  in- 
dustrial potential  of  a  people. 

Under  private  capitalism,  the  credits,  or  cir- 


132  Appendix 

culating  money-debts,  which  constitute  the 
"purchasing  power"  of  Private  Finance,  com- 
prise less  than  eighteen  per  cent  of  the  capital- 
ized values  of  land.  Hence  it  is  not  unreason- 
able to  suppose,  that  under  supersolvent  con- 
ditions, the  money  in  actual  circulation  along 
the  channels  of  trade  will  not  exceed  twenty 
per  cent  of  that  value,  leaving  an  aggregate  of 
some  eighty  per  cent  in  idle  money  reserves 
potentially  and  actually  competing  for  oppor- 
tunities of  investment,  and  thus  forever  fore- 
stalling and  nullifying  all  attempts  to  wring 
monopoly  profits  out  of  commerce  and  industry. 
With  such  a  flood  of  idle  competitive  reserves, 
the  credit  system  and  its  funded  and  panic- 
laden  insolvencies  will  appear  inconceivable, 
and  Private  Finance  with  its  organized  voraci- 
ties, amazing  privileges,  and  dangerous  powers, 
become  a  reproachful  memory.  Without  cumu- 
lative capitalism,  parasitic  commercialdom  with 
its  princely  profits  and  feudal  powers  will  per- 
ish, and  the  Marshall  Fields  of  business,  except 
as  salaried  managers  and  small  stockholders  in 
popularly  subscribed  stock  enterprises,  will  be- 
come unknown.  With  a  "decapitalized"  com- 
merce, the  mercantile  field  of  endeavor  will 
offer  no  better  incomes  than  those  of  any  other 
speculative  avocation — the  profits  of  risk  and 
initiative  at  the  margin  of  competitive  produc- 
tion. Such  deplorable  conditions  as  have  been 
partially  unearthed  by  the  Stanley  and  Pujo 
Committees  and  by  the  stock  exchange  revela- 


The  Law  of  Money  Volume  133 

tions  would  be  impossible  under  a  supersolv- 
ency  of  commercial  values. 

Private  Finance  is  the  parent  of  all  artificial 
economic  disparities,  and  the  grandparent  of 
all  private  privileges,  personal  dominions,  and 
irresponsible  powers.  Mr.  Morgan  may  deny 
the  possibility  of  a  money  monopoly,  but  what 
is  a  money  monopoly  under  our  subsolvent  con- 
ditions but  a  monopoly  of  credit-means  which 
he  and  his  financial  affiliations  so  completely 
control  ?  ^And,  furthermore,  what  is  to  prevent 
the  Morgans  of  credit  finance  from  merging  all 
the  gold-mining  interests  of  the  world  into  a 
closed  monopoly  of  the  present  gold-based 
money-means  ? 

We  are  to-day  in  the  grasp  of  a  potential 
syndicate  of  solvent  functions  and  nothing  but 
the  destruction  of  Capitalism  will  break  the 
strangle-hold  and  deliver  us  from  financial  ab- 
solutism and  industrial  dependence. 


INDEX 


Abstinence,  theory  of,  63,  64. 

Administrative  functions,  the 
economic  tests  of,  27. 

Administrative  potential,  25. 

Aldrich  Report  on  Wages,  107, 
108. 

Armaments  of  commerce,  77. 

Average  incwme,  law  of,  30. 

Bank  reserves,  no  profit  in,  68. 

Bond  markets,  58. 

Bureau  of  Labor,  wage  rates, 
105,  106,  107. 

Business  monopoly,  69. 

Business,  technics  of,  74. 

Capital,  12. 

Capital  as  a  "preferred  part- 
ner," 13. 

Capital,  definition  of,  51,  52. 

Capital,  incomeless  under  su- 
persolvency,  73. 

Capital,  legitimate  profits  of, 
73. 

Capital,  overproduction  of,  64. 

Capital,  premiumless,  lack  of, 
68. 

Capital,  productivity  of,  62. 

Capital,  saving  of,  63,  64,  122. 

Capital,  scarcity  of,  63,  64. 

Capital,  the  economic  facto- 
tum, 13. 

Capital,  voracity  of,  124,  125. 
Plate  V. 

Capitalism,  53,  59,  92,  94. 

Capitalism  and  landlordism, 
13,118. 

Capitalism  and  money  mo- 
nopoly, 133. 

Capitalism  as  an  avoidable 
expedient  of  liquidation, 
12. 


Capitalism,  cumulative.  Plate 
VI. 

Capitalism,  justification  of,  61. 

Capitalism  on  trial,  84. 

Capitalism,  public,  60. 

Capitalized   income,    62,  71,  72. 

"Capitalized  income"  and  "fi- 
nanced outgo,"  iv,  16,  94. 

Capitalized  income,  apologies 
for,  67. 

Capitalized  income  and  State- 
guaranteed  solvency,  14,  15, 
60. 

Capitalized  income,  ladder  of, 
90. 

Capitalizer  and  capitalized,  16. 
Plate  III. 

Carnegie,  admissions  of,  69. 

Chattel  slavery,  59. 

Child  labor,  80. 

Civic  pride  and  parasitic  pros- 
perities, 80. 

Civics,  applied,  21. 

Civilization  a  class  product, 
iii,  87. 

Civilizations  parasitic  in  the 
body  of  Labor,  86. 

Collective  function,  abdica- 
tion of,  57. 

Commercial  classes,  func- 
tions of,  79. 

Commercial  potential,  25. 

Commercial  values,  insolv- 
ency of,  Plate  I. 

Competitive  elimination,  bene- 
fits of,  30. 

Competitive  money  means, 
40,  80. 

Competition,  promotion  of,  70. 

Compensatory  economics,  14. 


135 


136 


Index 


Consumption  and  production 
even  paced,  101. 

Corruption  in  public  office,  80. 

Courts  of  science,  82. 

Credit,  business  trenching  on 
the  scope  of,  75,  Plate  V. 

Credit  finance  as  an  expedi- 
ent of  solvency,  55,  56. 

Credit  finance  as  a  public 
function,  14,  15. 

Credit  finance,  offspring:  of 
subsolvent  conditions,  69. 

Credit  liquidation,  costs  of, 
56, 129. 

Credit  system,  12,  37,  50,  52, 
53,  55,  66. 

Credit  system,  integrity  of, 
75. 

Credit  system,  public,  60. 

Criteria  of  economic  efficien- 
cy, 27. 

Criterion  of  social  normality, 
15. 

Currency  based  in  environ- 
ment assets,  44. 

Currency,   debasement  of,   51. 

Currency,  elastic,  68. 

Currency  of  self-liquidation, 
44,  Plate  II. 

Currency,  par  redemption  of, 
129. 

Democracies,  iii,  61,  Plate  VI. 

Diagnosis  of  economic  situa- 
tion, v. 

Distributing  classes  versus 
the  producing  classes,  76. 

Dominions,   commercial,    74. 

Dominions,  personal,  60,  89, 
92. 

Dun's  Review,  Plate  V. 

Earnings,  average  American, 
125. 

Economic  automatism,  50,  69. 

Economics  and  ethics,   20,  21. 

Economics,  applied,   21,  94. 

Economics  applied,  definition 
of,  49. 

Economic  doctrine  and  feudal 
dominion,  92. 

Economic  equation,  i,  22. 


Economic  expediency,  tests 
of,  27. 

Economic  feudalism,  61,  85, 
Plate  IV. 

Economic  formula,  i,  22. 

Economic  fundamentals,  own- 
ers of,  ii,  Plate  IV. 

Economic  fundamentals,  rent- 
ers of,  ii,  Plate  IV. 

Economic  fundamentals,  the 
traffic  in,  70,  78. 

Economic  fundamentals,  the 
usurpation  of,  49,  61,  63. 

Economic  fundamentals,  trib- 
ute from,  62. 

Economic  interests,  antago- 
nism of,  i. 

Economic  justice,  perversions 
of,  61. 

Economic  larceny,  84. 

Economic  normality,  test  of, 
19. 

Economic  parasitism,  i. 

Economic  procedure,  rule  of, 
i,  9,  28. 

Economic    righteousness,    82. 

Economic   unit,   33. 

Economic  unit  can  be  ex- 
pressed in  terms  of  pro- 
ductive sacrifice,  21. 

Economic  unit  cannot  be  ex- 
pressed in  terms  of  satis- 
faction, 21. 

Economic  vampirism,  privi- 
lege of,  90. 

Economics  of  capitalizer  and 
capitalized,  13,  16,  94. 

Economics,  compensatory,  14. 

Economists,  classical,  93. 

Economics,  normal  and  ab- 
normal, 8. 

Effort  and  resistance,  21,  22. 

Environment  basis,  46. 

Environment  basis,  critics  of, 
45. 

Environment  potential,  25,  28. 

Environment  unit,  46. 

Equal  opportunity,  law  of,  82. 

Equities,  violation  of  by  dis- 
parities in  fortune,  91. 


Index 


137 


Estates;  first,  second,  third 
and  fourth,  Plate  IV. 

Ethics  and  economics,   9. 

Ethics,  applied,  20,  21. 

Evolutionary  expediency,  the 
economic  justification  of 
parasitism,  86. 

Evolutionary  Impulse,  alone 
permanent,  88. 

Exchange  of  cheap  surpluses, 
30. 

Exchange  of  goods  an  ex- 
change of  services,  19. 

Facilities  F,   22,    25. 

Feudal  dominion,  60,  92. 

Financial  absolutism,  69. 

Financial  Fev«f  Chart,  PI.  V. 

Financial  instability,  pyra- 
mid of,  Plate  II. 

Financial  vampirism,   59. 

"Financed"  privation,   121. 

Food  resource,  dominating 
factor,  28. 

Fortunes,  classification  of,  85. 

Franchise  values,  113,  116. 

Gary,  Judge,  admissions  of, 
69. 

Gold,  appreciation  of,  109, 
110. 

Gold  as  a  money  basis,  38, 
39. 

Gold  as  a  substitutional 
value,  51. 

Gold  basis,  redemption  of,  44. 

Gold,  consumption  of  in  arts, 
36. 

Gold,  depreciation  of,  35,  104, 
109,  Plate  VI. 

Gold,   dispensability   of,   38. 

Gold,  marginal  value  of,  11, 
99. 

Gold,  money  value  of,  66. 

Gold,  solvent  power  of,  36,  37. 

Gold,   "title  to  capital,"   38. 

Gold,  utility  of,  38,  102. 

Gold  want,  per  capita,  36,  101, 
102,  103. 

Governments,  divinely  or- 
dained, 82. 


Governments  in  constructive 
conspiracy  against  public 
interests,  83. 

"Guarantees"  of  money  pay- 
ment, 52,  53. 

Holmes,  G.  K.,  distribution  of 
wealth,  120,  Plate  III. 

Host  class  has  no  tendency 
to  diminish  in  numbers,  90. 

Human  wants,  strength  of, 
100,  Plate  I. 

Idle  income,  socialization  of, 
80. 

Income,  claimants  of,  13. 

Income  expenditure  of  2567 
families,  table  of,  99. 

Income,  law  of,  28. 

Income  of  Private  Finance, 
124. 

"Income"  side  of  economics 
vs.  the  "Outgo"  side,  94. 

Incomes,   effortless,   63. 

Incomes  from  usurped  funda- 
mentals, Plate  VI. 

Imperialisms,  61. 

Impermanency  of  human  in- 
stitutions, 88. 

Individualists,   95. 

Industrial  initiative,   23. 

Industrial   potential,    25,   42. 

Industrial  potential  and  pace 
the  real  object  of  census 
inquiry,  124. 

Industry,  defeudalization  of, 
80. 

Injustice,  self  -  perpetuating, 
iv,  v. 

Insolvencies,  capitalized,  130. 

Insolvencies  of  Private  Fi- 
nance, ii. 

Insolvency,  mobilization  of  by 
credit  system,  50. 

Insolvency  of  values,  53. 

Intellectual   potential,    23,    25. 

Interest  bonus,  62. 

Interest,  the  claimants  of,  13. 

Interest,  compound,  curve  of, 
Plate  VI. 

Interest,  cyclic  intervals  of, 
Plate  VI. 


138 


Index 


Interest,  theories  of,  63,  67. 

Interest;  theory  of  discount- 
ing, the  future  for  the  pres- 
ent, 64. 

Interest  rate,  a  drain  on  in- 
dustry, 50. 

Interest  rate,  a  measure  of 
the  wastes  of  artificial  solv- 
ency, 66. 

Irresponsible  power,  60. 

Jevons,  Professor,  price  fluc- 
tuations of  gold,  109,  110. 

Justice,   applied,    95. 

Justice,  fundamental,  94. 

Labor  at  a  discount,  capital 
at  a  premium,  96. 

Land  assets  in  1901,  Plate  II. 

Landlordism,  private,  13,  71, 
92,  94,  118. 

Land  and  labor  values  based 
in  income,  129. 

Land  rent,  per  capita,  129, 
130. 

Land  tax  and  land  values, 
128. 

Land  tax  and  the  rent  income, 
Plate  II. 

Land  values  and  the  life  risk, 
15. 

Land  values  and  the  tax  rate, 
117. 

Land  values  and  wealth  esti- 
mate of  Twelfth  Census, 
114,  115. 

Land  values  as  a  source  of 
public  wealth,  71. 

Land  values  as  residual 
values,  118. 

Land  values,  definition  of,  42, 
43. 

Land  values  in  Colonial 
times,  111. 

Land  values  in  New  York 
City,  111,  119. 

Land,  value  of  renting  privi- 
lege, 126,  127. 

Land  values,  nationalization 
of,  44. 

Land  values,  present  and  fu- 
ture, 129. 


Land  values  versus  physical 
improvements,  112,  113,  114, 
119. 

Law  of  demand  and  supply, 
70. 

Law  of  money  volume,  47, 
126,  131. 

Law  of  reciprocal  service,  60. 

Law  of  solvent  functions,  i. 

Leisured  classes,  60. 

Leisured  classes,  justification 
of,  86. 

Leisure-class  point  of  view, 
92. 

Life  risk,  15,  65. 

Maintenance  of  buildings  and 
structures,  130. 

Malthus,   law  of,  71,   94. 

Marginal  value  of  gold,  35, 
36,  Plate  I. 

Marginal  value  of  gold,  cumu- 
latively expanded,  11,  50. 

Marginal  value  of  dispensa- 
ble and  indispensable  utili- 
ties, 36. 

Marginal  values,  chart  of,  99, 
Plate  I. 

Mathematics  as  a  criterion  of 
science,  9. 

Mechanical  potential,  25. 

Meliorism,  compensatory,  94. 

Mental  potential,  23. 

Mental  versus  the  manual 
element,  23. 

Mercantilism,   74,   75. 

Metal  basis,  limitations  of, 
15,  16. 

Metal  basis,  money-scope  of, 
51. 

Militarism,   61. 

Mill,  John  Stuart,  distributive 
justice,  10. 

Millionaire  class,   79. 

Mitchell,  John,  125. 

Monetary  situation  in  1901, 
Plate  II. 

Money  as  a  "deferred  pay- 
ment," 51,  52. 

Money  as  a  discounter  of 
risks,  39. 


Index 


139 


Money  as  a  substitutional 
value,  39. 

Money  as  a  "title  to  capital," 
12. 

Money  asset,  liquefaction  of, 
39. 

Money  assets,  chronic  short- 
age of,  51. 

Money  base,  depreciation  of, 
Plate  V. 

Money  base,  overissue  and 
underissue,  46,  130,  131. 

Money  basis,  environment  as, 

45,  126. 

"Money  debts,"  57,  58. 

Money,  fluctuations  in  value, 
Plate  V. ' 

Money  function,  decapitaliza- 
tion  of,  80. 

Money  in  the  channels  of 
trade,  132. 

Money  hoards,  average,  127. 

Money  hoards  under  capital- 
ism, 128. 

Money  hoards,  law  of  private, 
131. 

Money  line  should  be  straight, 
Plate  V. 

Money  metals,  fluctuations  in 
value,  104. 

Money  of  circulation,  par  re- 
demption of,  129. 

Money,  premium  on,  40. 

Money-scope,  inflation  of,   51. 

Money-scope  of  money-base, 
11,  40,  41. 

Money  reserves  and  monopoly 
profits,  132. 

Money  reserves  as  demands 
for  services,  128. 

Money  reserves  competing  for 
investments,  132. 

Money  reserves,  premium- 
less,  40,  41. 

Money  unit,  definition  of,  33. 

Money  unit,  depreciation  of. 
51,  131. 

Money  unit,  renting  power  of, 

46,  126,  127. 


Money  units,  fixing  the  value 

of,  126. 
Money    units,    redemption    of, 

126. 

"Money"   units  versus   "prop- 
erty" units,  129. 
Money   volume    depends    upon 

urgencies   of   production, 

131. 

Money  volume,  per  capita,  127. 
Money  volume  self-regulating 

and  self-limiting,  131. 
Money    volume,    the    law    of, 

126,  131. 
Monopoly    of    solvent    means, 

68,  69. 

Monopoly,  prevention  of,  70. 
Monopolies,    socialization      of 

natural,  82. 
Morgan,  J.  P.,  and  the  money 

monopoly,  132,  133. 
Mulhall,  wage  rates,  106. 
Muscular  powers  of  men,  23. 
National   policies,   expediency 

of,  27. 

Notes  of  exchange,   etc.,    44. 
Ohm's  law  of  electricity,  22. 
"Open  door,"   77. 
Opportunities,    equalized,     49, 

82. 

Organized      violence      unwar- 
ranted, 78. 
"Outgo    side"    of    economics, 

94. 
"Outgo"    of   the   unpropertied 

producer,  iii,  iv,  124. 
Owners    of    economic    funda- 
mentals,  13,    49,    58,    61,    63, 

70,  93,  Plate  IV. 
Panic  Finance,  chart  of,  Plate 

V. 

Panic  industrialism,  84. 
Panics,  54,  75. 
Panics,     State     responsibility 

for,  Plate  V. 

Parable  of  the  Talents,  122. 
Parasite,  supreme,  60. 
Parasitically  advantaged,  the, 

ii. 


140 


Index 


Parasitically  disadvantaged, 
the,  ii,  iii. 

Parasitism  economically 
avoidable,   ii. 

Parasitism,  expediency  of,  85, 
86. 

Parasitism,  self-perpetuating, 
iv,  v. 

Parasitism,  the  social  pyra- 
mid of,  Plate  IV. 

Parasitism,  79,  85,  90,  122. 

Parasitic  foundations  of  so- 
ciety, i. 

Parasitic  income,  121,  122. 

Parasitic  outgo,  121,  122. 

Parity  between  derivative  and 
fundamental  values,  127. 

Parity  between  land  and  the 
derivative  values  of  com- 
merce, 130,  131. 

Parity  between  money  and 
land.  130. 

Paternal  dominions,  89. 

Patriotism,  77. 

Per  capita  wealth,  60. 

Physical  values,  42. 

Political  controls  are  para- 
sitic controls,  86. 

Political  science,  basic  law  of, 
82. 

Political  science,  test  ques- 
tions of,  27. 

Politics,  decommercialized,  80 

Population  pressure,  72. 

Population  pressure  and 
rents,   130 

Potential  E,  22. 

Predatory  stage  of  evolution, 
i,  61. 

Pressure  on  resource  and 
wage  rates,  29. 

Prices,  law  of,  28. 

Prices,  rising  and  falling,  35. 

Prices,    State    regulation    of, 

69,  70. 

Private  capitalism,  51,  71,  73. 
Private    capitalism    and    eco- 
nomic interpretations,  16. 
Private  Finance,  54,  57,  68,  69, 

70,  73,  75. 


Private  Finance  and  circulat- 
ing credits,  132. 

Private  Finance  and  economic 
antagonism,  78. 

Private  landlordism  an  op- 
tional capitalism,  13,  71, 
118. 

Private  property  rights,  72, 
73. 

Private  property  rights  in- 
fringed, 84. 

Producer,  the  "financed"  and 
"tariffed,"  75. 

Product  P,  22. 

Product,  law  of,  28. 

Production  and  consumption 
even  paced,  101. 

Production,  speculative  and 
routine,  23. 

Productive  automatism,  24. 

Productive  sacrifice  an  eco- 
nomic constant,  35. 

Profits  of  risk,  capital  entitled 
to,  73. 

Propertied  classes  financially 
privileged,  57,  58. 

Property  hoards  versus  money 
hoards,  128. 

"Property"  units  vs.  "money" 
units,  129. 

Propertyism,  53. 

Prosperities  of  the  advan- 
taged, 76. 

Protectionism  and  foreign 
competition,  30. 

Public  assets,  liquefaction  of, 
44. 

Public  debts  and  public  bless- 
ings, 52. 

Public  expediency,  the  law  of, 
82. 

Pujo  Committee,  132. 

"Purchasing  Power,"  52,  53, 
132. 

"Quantity,"  law  of,  131. 

"Quantity"  theory,  33,  47. 

Raffles  of  Industry,  73. 

Reciprocal  services,  72,  79. 

Rent,  a  commuted  interest 
rate,  13. 


Index 


141 


Rent,  the  claimants  of,  13. 

Rent  of  equalization,  47. 

Renting  privilege,  marginal 
value  of,  46,  47. 

Renters  of  economic  funda- 
mentals, Plate  IV. 

Reserves  of  competency,  130. 

Reserves  of  competency  and 
standards  of  living,  127. 

Resistance  and  effort,   21,  22. 

Resources,  exhausting  the 
natural,  76. 

Resources,  pressure  on,  and 
wage  rates,  105. 

Right  of  action  against  State, 
84. 

Risks,  discpunyjig  of,  not  the 
cause  of'  the  interest  rate, 
65. 

Risks  of  initiative  the  legiti- 
mate profits  of  capital,  73. 

Rockefeller,  J.  D.,  wealth,  and 
services  to  humanity,  85. 

Routine  production,  23. 

Routine  producer,  the,  85,  91. 

Routine  producer's  helpless 
outlook,  93. 

Railway  stocks,  average  fluc- 
tuations of,  Plate  V. 

Sacrifice  of  production  an 
economic  constant,  104. 

Savings,  average,  127,  130. 

"Scarcity"  values,  29,  72. 

Science,  economics  as  a,  9. 

Science  and  social  reform, 
96. 

"Science  of  wealth,"  70. 

Science,  the  true  test  of,  8,  9. 

Science  versus  opinion,  9. 

Securities,  52. 

Self-liquidation  of  fundamen- 
tals, 80. 

Self-liquidation  of  land,  44. 

Self-liquidation  program,  44. 

"Servant  question,"  92. 

Single-taxers,  95. 

Slaves,  "capitalized,"  63. 

Smith,  Adam,  economics,  9,  10. 

Smith,  Adam,  standard  of 
value,  104. 


Social  arrangements  a  class 
product,  iii. 

Social  condition,  diagnosis  of, 
v,  14. 

Social  controls  are  parasitic 
controls,  86. 

Social  disparities  not  made  to 
order,  90. 

Social  equality  not  an  equal- 
ity of  fortune,  91. 

Social  question,  and  issue  be- 
tween the  propertied  and 
unpropertied,  v. 

Social  reform,  common  plat- 
form of,  vi,  95. 

Social  self-introspection  diffi- 
cult, 87. 

Socialists,  95. 

Socialization  of  fundamentals, 
50. 

Solvency,  costless,  41,  45. 

Solvency,  costs  of  sustained 
ten-thousand  dollar,  59,  129. 

Solvency  of  values,  50. 

Solvency,  principle  of,  41. 

Solvency,  State  -  guaranteed, 
14,  15. 

Solvent  functions,  45,  46. 

Solvent  functions,  law  of,  15, 
51,  126,  131. 

Spahr,  Charles  G.,  Distribu- 
tion of  wealth,  120,  Plate 
III. 

Speculative  producers,  91. 

Speculative  production,  23,  24. 

Standards  of  living  and  popu- 
lation pressure,  29. 

Standards  of  living,  feudal, 
79. 

Standardized  unit  of  value,  33. 

Stanley  Committee,  69,  132. 

State,  a  commercial  institu- 
tion, 75. 

State  as  a  custodian  of  sav- 
ings, 44. 

State  as  foster  parent  of  pri- 
vate capitalism,  83. 

State,  creature  of  parasitic  in- 
terests, iii,  v. 


142 


Index 


State-guaranteed  solvency,  14, 
15. 

State,   liabilities   of,    83. 

State,  paramount  duty  of,  83. 

State,  paramount  functions 
of,  48. 

Stock  exchange  investiga- 
tions, 132. 

Stock  fluctuations,  railway, 
Plate  V. 

Subsolvency  of  values,  37,  54. 

Supersolvency  of  values,  36, 
54,  131. 

Supersolvency,  technics  of, 
47. 

"Surplus  value,"  62. 

Sweatshops,   80. 

Symbiosis,  86. 

Tariff  imposts,  76. 

Tariff  legislation,  risks  of, 
Plate  V. 

Taxation  and  the  taxing 
power,  48,  84. 

Technical  potential,  25. 

The  New  York  Herald,  mil- 
lionaires, 120,  Plate  III. 

Titles  of  private  ownership 
to  fundamentals,  83. 

Trade-unionists,  95. 

Unemployment,  54. 

Unpropertied,  the,  58. 

Unpropertied,  the,  interests  of 
overlooked,  iii,  iv,  Plate  IV. 

Unpropertied,  the,  pay  all 
rents,  taxes,  and  interest 
rates,  ii,  Plate  IV. 

Usufruct  of  fundamentals, 
62. 

Unit  of  economic  measure- 
ment, 9. 

Unit  of  productive  efficiency, 
33. 

Unit  of  value  a  measure  of 
productive  sacrifice,  35. 

Value,  definition  of,  17. 

Value  in  a  commercial,  eco- 
nomic and  ethical  aspect, 
20. 

Value  constant  of  economics, 
34. 


Value  of  land-based  money 
unit,  126. 

Value  of  land-based  money 
unit  independent  of  money 
volume,  127. 

Value  from  consumer's  view- 
point, 19. 

Value  from  the  producer's 
viewpoint,  19. 

Value,  two  dimensions  of,  20. 

Value  as  a  labor  cost,  19. 

Value,  marginal,  19,  20. 

Value,  standard  of,  126. 

Values,  functional  insolvency 
of,  12. 

Values,  money,  45. 

Values  and  population  pres- 
sure, 43,  44. 

Values,  "property,"  45. 

Values  of  scarcity,  43. 

Values,  surplus,  43. 

Values,  the  appraisements  of 
under  private  capitalism, 
15. 

Values,  the  ultimate  basis  of, 
126. 

Volume,  law  of  money,  131. 

War  footings  of  commerce, 
77,  78. 

Wages,  the  average  Ameri- 
can, 125. 

Wages,  artificially  raised,  30, 
31. 

Wage  comparisons,  table  of, 
108. 

Wages,  English,  fourteenth 
century,  105,  106. 

Wages,  "iron  law"  of,  94. 

Wages,  law  of,  28. 

Wages  level,  29. 

Wages  of  function,  62,  73. 

Wage  rates,  29,  30. 

Wage  rates,  how  influenced, 
105. 

Wage  rates,  maintenance  of, 
29. 

Wages,  rise  of,  31,  32,  36. 

Wages  statistics,  104. 


Index 


143 


Wages,     State    regulation    of 

69,  70. 
Wealth  as  a  perpetual  flow  of 

values,  15. 

Wealth,  average,  59,  121. 
Wealth,    composite   curve    of, 

59,  Plate  III. 
Wealth  concept  feudal,  70,  71, 

72. 

Wealth  curve,  85. 
Wealth,  definition  of,  17,  72. 
Wealth,  disparities  in,  66. 
Wealth,    distribution    of,     85, 

120,  Plate  III. 


Wealth,  line  of  average, 
i,  ii,  Plate  III. 

Wealth  of  nations,  42,  43,  128. 

Wealth,  parasitic,  Plate  III. 

Wealth,  per  capita,  45,   128. 

World's  markets  and  oppor- 
tunities of  employment,  77. 

"Working  classes,"  92. 

Workingman's  budget,  11,  99, 
100.  101,  102,  103. 

Wright,  Carroll  D.,  wage 
rates,  107. 

Zone  of  economic  spoliation, 
121. 


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